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Tag Archives: 20%/10% guidelines

Rolling-Down On a Sharp Market Decline at the End of a Contract

Exit strategy opportunities may be created when there is a substantial 1-day market decline and we must be prepared to take advantage of these occasions. In June 2020, there was an 1800 point decline in the Dow 30 due to coronavirus concerns and national unrest related to police shootings. Many members of the BCI community […]

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Anatomy of a Reverse Stock Split

Option contracts can be standard or adjusted. Certain corporate events may change standard option contracts to adjusted contracts. These events include stock splits, mergers, acquisitions, special dividends, spin-offs and reverse splits. After these events, options are altered to reflect these changes and make buyers and sellers of options whole. This article will focus in on […]

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Automating the 20%/10% Guidelines

Position management is the 3rd required skill for achieving the highest level of option-selling success. One of the most important of the BCI protocols for covered call writing are the 20%/10% guidelines which assists us is closing short calls when those opportunities are presented. This allows us to mitigate situations when share price declines. These […]

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covered call writing trade management

Trade Management: A Real-Life Example with Brooks Automation, Inc. (NASDAQ: BRKS)

Once we enter our covered call writing trades, we immediately go into position management mode. In August, 2018, Mike generously shared with me a series of trades he executed using Brooks Automation, Inc and asked for my evaluation of his management of these trades. This article will detail and evaluate each aspect of the series […]

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covered call writing and technical analysis

Position Management in the Final Week of a Contract: A Real-Life Example with FIVE

Exit strategy preparation and implementation is one of the 3 required skills for successful covered call writing and put-selling. Because of the time value erosion of our options (Theta), there are limitations regarding the exit strategy opportunities as our contracts near expiration. In January 2018, Duminda contacted me about a trade he executed with Five […]

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Alan Ellman article

Setting the 20%/10% Guidelines After Rolling out-And-Up

Exit strategies for covered call writing are critical to the ultimate success we achieve when selling covered call options or cash-secured puts. One of the prime strategies associated with covered call writing when share price declines is the 20%/10% guideline. This strategy guides us when to close our short options position if share price declines […]

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