Contract adjustments to the terms of our covered call writing and put-selling options are due to corporate actions like mergers and acquisitions, special dividends and stock splits. This article will highlight the contract alterations resulting from special dividends and equity distributions. Special cash dividends: 2 adjustment techniques 1. Ticker remains unchanged Number of […]

Special Cash Dividends and Equity Distributions: Understanding Contract Adjustments
Posted on December 26, 2020 by Alan Ellman in Investment Basics, Option Trading Basics, Options Calculations, Options Trade Execution, Stock Investing, Stock Option Strategies

Even and Odd Stock Splits: Understanding Contract Adjustments
Posted on December 5, 2020 by Alan Ellman in Investment Basics, Option Trading Basics, Options Calculations, Options Trade Execution, Stock Option Strategies
Contract adjustments to the terms of our covered call writing and put-selling options are due to corporate actions like mergers and acquisitions (see the thread on last week’s blog commentary regarding AAN), special dividends and stock splits. Stock splits fall into 3 categories: Even splits Odd splits Reverse splits: (1-for 5, as an example) This […]

Reverse Stock Splits: Understanding Contract Adjustments
Posted on May 30, 2020 by Alan Ellman in Fundamental Analysis, Investment Basics, Option Trading Basics, Options Trade Execution, Stock Investing, Stock Option Strategies
Contract adjustments to the terms of our covered call writing and put-selling options are due to corporate actions like mergers and acquisitions, special dividends and stock splits. This article will highlight the contract alterations resulting from a reverse stock split. What is a reverse stock split? This is a reduction in the number of […]

American Depository Receipts and Special 1-Time Cash Dividends/ Discount Coupons for New Book & Calculators
Posted on June 30, 2018 by Alan Ellman in Investment Basics, Option Trading Basics, Options Calculations, Stock Investing, Stock Option Strategies
When viewing option chains while crafting our covered call writing portfolios, from time-to-time we will see unusual strike prices. These anomalies are usually associated with various corporate events that result in option contract adjustments. Such events include stock splits, mergers and acquisitions and the one highlighted in this article, special 1-time cash dividends. In July […]

Generating 2% – 4% in Bull Markets: How to Take Advantage of Out-Of-The-Money Strikes
Posted on June 23, 2018 by Alan Ellman in Investment Basics, Option Trading Basics, Options Calculations, Stock Investing, Stock Option Strategies, Uncategorized
The 3 required skills for covered call writing and selling cash-secured puts are stock selection, option selection and position management. This article will use real-life examples highlighting the first 2 of these skill sets in a bull market environment. Article assumptions and guidelines Portfolio is set up in a bull market environment Target goals […]

Mergers and Acquisitions: Part I- All Cash Mergers
Posted on October 10, 2015 by Alan Ellman in Investment Basics, Option Trading Basics, Stock Option Strategies
Contract adjustments will change our covered call writing and put-selling positions. In the past, I have written about the effect stock splits and dividends have on our positions. In this article, I will highlight another cause of these adjustments, mergers and acquisitions (M&A). This is a corporate event where two companies are joined into one […]

Rolling Down And Stock Splits: A Real Life Example
Posted on August 16, 2014 by Alan Ellman in Covered Call Exit Strategies, Exit Strategies, Option Trading Basics, Options Calculations, Stock Option Strategies
Covered call writing positions can be altered by exit strategies or contract adjustments. Contract adjustments are alterations that are typically made to option contracts when the underlying stock undergoes a stock split, pays a special cash and/or stock dividend or distribution, or is involved in a merger, acquisition or corporate reorganization. Sometimes they are impacted by […]

When Strike Prices Disappear: Contract Adjustments
Posted on January 11, 2014 by Alan Ellman in Investment Basics, Option Trading Basics, Options Calculations, Options Trade Execution
Stock options are contracts with terms that can change prior to expiration. Mergers, acquisitions, special dividends and stock splits are some of the events that may necessitate the change in terms. Since early September, New Orient Edu&Tech (EDU) has been on the Blue Collar Premium Stock List. In the middle of September I received several […]

Covered Call Writing And Contract Adjustments + Our Premium Report Is Getting Even Better
Posted on December 14, 2013 by Alan Ellman in Investment Basics, Option Trading Basics, Options Calculations, Options Trade Execution, Stock Option Strategies
Options Trading Basics includes the fact that one options contract incorporates 100 shares of the underlying security. The right or the obligation is for the purchase or sale of 100 shares of stock or exchange-traded funds. This is the rule but there are exceptions to this rule. From time to time a certain event will […]

Covered Call Writing In India
Posted on April 20, 2013 by Alan Ellman in Covered Call Exit Strategies, Options Calculations, Options Trade Execution, Stock Option Strategies
I recently learned that covered call writing comes in all shapes and sizes. Although we are honored to have a significant number of international members, most trade US stocks on US exchanges with the rules we are familiar with. But what if the rules were different? Let’s look at baseball for a minute. What if […]
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