Comments on: Real Life Covered Call Trade With PRLB https://www.thebluecollarinvestor.com/real-life-covered-call-trade-with-prlb/ Learn how to invest by selling stock options. Sun, 02 Mar 2014 22:16:12 +0000 hourly 1 By: Alan Ellman https://www.thebluecollarinvestor.com/real-life-covered-call-trade-with-prlb/#comment-18605 Sun, 02 Mar 2014 22:16:12 +0000 http://www.thebluecollarinvestor.com/?p=9220#comment-18605 In reply to David.

David,

The main reason I decided to stay with this stock for a day or two was because it declined due to overall market forces, nothing to do with the company itself. Check out the chart I created below and see how the S&P 500 had a significant decline the same time as PRLB. Now had the market/stock not recovered as it did, I would have rolled down a day or two later. CLICK ON IMAGE TO ENLARGE AND USE THE BACK ARROW TO RETURN TO BLOG:

Alan

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By: David https://www.thebluecollarinvestor.com/real-life-covered-call-trade-with-prlb/#comment-18604 Sun, 02 Mar 2014 22:11:42 +0000 http://www.thebluecollarinvestor.com/?p=9220#comment-18604 Alan,

Question regarding your 2/8/14 blog titled, “Real Life Covered Call Trade with PRLB”. In this example you wrote how the trade was initially entered, closed out and another call sold. What you really did not write about is on 10/9/13 PRLB declined to 71.50. It was purchased for 78.10. At this point there was a 8.5% loss on the stock purchase. PRLB did recover but at this point you did not know if it was going to drop further or not. Did you have a price in mind at this point where you would sell the stock and get out of the trade completely? Thanks.

David

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By: Alan Ellman https://www.thebluecollarinvestor.com/real-life-covered-call-trade-with-prlb/#comment-18437 Wed, 12 Feb 2014 22:50:16 +0000 http://www.thebluecollarinvestor.com/?p=9220#comment-18437 Premium members:

This week’s 7-page report of top-performing ETFs and analysis of ALL Select Sector Components has been uploaded to your premium site. The report also lists Top-performing ETFs with Weekly options.

You will note that the implied volatility of the overall market and most of our securities is lower than the past week, a positive for covered call writers.

For your convenience, here is the link to login to the premium site:

http://www.thebluecollarinvestor.com/member/login.php

NOT A PREMIUM MEMBER? Check out this link:

http://www.thebluecollarinvestor.com/membership.shtml

Alan and the BCI team

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By: Alan Ellman https://www.thebluecollarinvestor.com/real-life-covered-call-trade-with-prlb/#comment-18432 Tue, 11 Feb 2014 23:25:31 +0000 http://www.thebluecollarinvestor.com/?p=9220#comment-18432 Running list stocks in the news: UA:

Under Armour, Inc. recently boasted a stellar 4th quarter earnings report beating consensus by $0.05/share and revenues up 35% year-to-year. It has averaged over 25% positive earnings surprises over the past 7 quarters. Our Premium Running List shows an industry rank of “B”, a beta of 1.18, weekly options available and adequate open interest. Below is a screenshot showing the outstanding increase in earnings estimates and positive surprises. CLICK ON IMAGE TO ENLARGE AND USE THE BACK ARROW TO RETURN TO THIS BLOG.

Alan

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By: Alan Ellman https://www.thebluecollarinvestor.com/real-life-covered-call-trade-with-prlb/#comment-18423 Sun, 09 Feb 2014 22:43:04 +0000 http://www.thebluecollarinvestor.com/?p=9220#comment-18423 In reply to Mark.

Mark,

The specific ITM strike selected will depend on 2 factors:

1- The goal for the initial 1-month return (2-4% in my case)
2- The amount of protection your overall market assessment and personal risk-tolerance dictates

For example, The more my concern for overall market direction, the closer to 2% my goal will be and the greater the protection I will require.

Let’s look at an example: FB

This stock (the #1 rated stock this week on the IBD 50) has weekly options so I can go out exactly one month from now. With FB trading @ $64.32, I entered the “bid” prices into the multiple tab of the Ellman Calculator for the following strikes:

$63.50
$63
$62.50
$61.50
$61

All offer acceptable 1-month returns, with the returns closest to 2% offering the greatest amount of downside protection.

CLICK ON IMAGE TO ENLARGE AND USE THE BACK ARROW TO RETURN TO THIS BLOG

Alan

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By: Mark https://www.thebluecollarinvestor.com/real-life-covered-call-trade-with-prlb/#comment-18422 Sun, 09 Feb 2014 22:30:44 +0000 http://www.thebluecollarinvestor.com/?p=9220#comment-18422 Hi Alan,

Could you please talk about the correct way to initiate a ITM position when the market is in correction mode? Is it one or two strikes below current price etc.

Thank-you,
Mark

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By: Barry B https://www.thebluecollarinvestor.com/real-life-covered-call-trade-with-prlb/#comment-18412 Sun, 09 Feb 2014 01:29:23 +0000 http://www.thebluecollarinvestor.com/?p=9220#comment-18412 Premium Members,
This week’s Weekly Stock Screen And Watch List has been uploaded to The Blue Collar Investor premium member site and is available for download in the “Reports” section. Look for the report dated 02-07-14.

Also, be sure to check out the latest BCI Training Videos and “Ask Alan” segments. You can view them at The Blue Collar YouTube Channel. For your convenience, the link to the BCI YouTube Channel is:

http://www.youtube.com/user/BlueCollarInvestor

Since we are in Earnings Season, be sure to read Alan’s article, “Constructing Your Covered Call Portfolio During Earnings Season”. You can access it at:

http://www.thebluecollarinvestor.com/constructing-your-covered-call-portfolio-during-earnings-season/

Best,
Barry and The BCI Team

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