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Tag Archives: BCI Put Calculator
put-selling calculator

Covered Puts Are NOT Cash-Secured Puts

Selling cash-secured puts is one of the go-to strategies in the BCI methodology. There has been some confusion for some of our members who conflate this strategy with covered puts, a completely different strategy. This article will define and compare the two strategies.   Selling cash-secured puts defined A put option (generally out-of-the-money) is sold […]

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Ellman Calculator

Should We Add a Short Put to Our Collar Trades?

A collar trade is a covered call trade with a protective put. Jim recently wrote to me asking about the efficacy of also selling an out-of-the-money put to help pay for the cost of the protective put. This article will analyze this series of trades to assess the pros and cons of adding that fourth […]

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strike price selection

Strike Price Selection When Selling Cash-Secured Puts: A Real-Life Example with WWE

Strike price selection is one of the 3-required skills when selling covered calls or cash-secured puts. This article will highlight the choices and rationale for our decisions when selling puts for World Wrestling Entertainment, Inc. (NYSE: WWE) on 9/24/2018.   Bullish price chart for WWE     Option-selling lowers our cost-basis and therefore we make […]

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Rolling Down Our Put Positions: When and Why?

  Rolling Down Our Put Positions: When and Why? When selling cash-secured puts, our breakeven stock price is the (out-of-the-money) strike price less the put premium. Our exit strategy guideline as to when to close the short put (buy back the put) is when share value declines to more than 3% below the strike price. […]

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BCI put calculator

Buying Back Put Options When Share Price Gaps Up: A Real-Life Example with AVGO

When selling cash-secured puts our position management skills include buying back the short puts under certain circumstances. These include situations when share price moves up or down dramatically. When share price declines below the breakeven, we start losing money. Our guideline is to buy back the sold put if share price declines by more than […]

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selling cash-secured puts calculations

Selecting the Best Put Strike Based on Overall Market Assessment

Selling cash-secured puts requires us to master the three required skills: stock (or ETF) selection, option selection and position management. This article will highlight how to select a put strike based on our overall market assessment.   Market assessment data published in BCI newsletters Investor Business Daily’s market assessment Dr. Eric Wish’s GMI Index BCI […]

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covered call writing and technical analysis

Setting Up a Covered Call Trade by First Selling an Out-Of-The-Money Put

A covered call trade can be initiated by first purchasing the underlying stock or exchange-traded fund (ETF). It can also be launched by first selling an out-of-the-money (OTM) cash-secured put and allowing exercise if the put strike is in-the-money (ITM) at expiration. This article will highlight a real life trade with LogMein, Inc (LOGM) which began by selling […]

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selling cash-secured puts

Rolling Up When Selling Puts To Buy A Stock At A Discount

Selling out-of-the-money cash-secured puts is a fantastic way to buy a stock at a discount. It can be used in lieu of setting limit orders. If exercised, our cost basis is the put strike minus the put premium generated. If unexercised, we get paid not to buy the stock! For example, if a stock is […]

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selling cash-secured puts in bear markets

Exchange-Traded Fund Option-Selling in Bear Markets

Covered call writing and put-selling can be used in most market conditions including bear markets. In my books and DVDs, I detail the use of in-the-money call options (strikes lower than current market value), out-of-the-money put options (also lower than current market value) and securities with low-implied volatility like exchange-traded funds (ETFs). In this article […]

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selling options in bear markets

Defensive Call and Put Positions in Bear and Volatile Markets

Strike price selection can be tailored to our covered call writing and put-selling trades based on overall market assessment. In bear and volatile market conditions we favor in-the-money calls and deeper out-of-the-money puts (lower than current market value). In this article, we will evaluate defensive trades for Smith & Wesson Hldg (SWHC) as of 1/11/2016, […]

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