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Tag Archives: covered call writing

What Do Covered Call Writing and Steroids Have in Common?

Most investors view covered call writing as a singular strategy where we buy a stock and then sell an option leveraging that security. In reality, educated option-sellers realize that one of the most remarkable advantages of using this strategy is that it can be crafted to achieve multiple goals and meet the trading style and […]

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put-selling calculations

Comparing Call and Put Strategies with Paylocity Holding Corporation (NASDAQ: PCTY)

Covered call writing or selling cash-secured puts… which is the best strategy? Well, they both offer great opportunities to generate cash-flow in a low-risk manner. I favor the former in normal to bull market environments and the latter in bear and volatile markets. On June 24, 2019, PCTY passed our rigorous screening requirements to earn […]

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technical analysis for covered call writing

Creating “Dividends” for Non-Dividend Stocks: A Real-Life Example with PAYC

Covered call writing can be beneficial to us in a variety of circumstances. This article will highlight how this strategy can be implemented to create a dividend-like cash flow for stocks that currently offer no dividend income. This can be particularly useful for those who will only purchase dividend stocks and miss out on other […]

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stock dividends

Converting Non-Dividend Stocks Into Dividend Stocks

Generating a consistent cash flow from stock dividends is an appealing benefit from owning shares for many investors. Stock ownership, in these scenarios, can create two income streams, one from price appreciation and the other from quarterly dividends. However, not all securities have associated dividends and some investors will bypass these stocks even if they […]

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S&P 500 chart

Why Covered Call Writing Outperforms the Overall Market

Why should we spend the time to educate ourselves on how to implement and manage covered call writing trades? The answer is simple: Once the 3 required skills (stock selection, option selection and position management) are mastered, we will put ourselves in a position to beat the market on a consistent basis. This article will […]

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Pros and Cons of Covered Call Writing: Calculation Perspective

Every investment strategy, including covered call writing and selling cash-secured puts, has advantages and disadvantages. When we decide to implement a plan, it is with the understanding that we accept and embrace these pros and cons. It is not productive to look back and say we could have made more money using a different approach. […]

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risk management for options

Naked Options versus Covered Options: Where Should We Take a Stand?

Covered call writing and selling cash-secured puts are more conservative strategies than trading naked options (selling calls and puts without having the resources to execute the potential trade obligations, if exercised). A naked call occurs when a speculator writes (sells) a call option on a security without ownership of that security. It is one of […]

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is covered call writing a zero sum game

Is Covered Call Writing a Zero Sum Game? Let’s Do the Math

Many assume that covered call writing is a zero sum game because we have traders executing equal but opposite trades using the same underlying security. As a covered call writer, we may sell 5 contracts of AAPL which means there is a buyer out there who just bought our contracts. If we win, they lose and […]

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risk-reward profiles for covered call writing and put-selling

Comparing Covered Call Writing and Selling Cash-Secured Puts

An accepted myth is that covered call writing and selling cash-secured puts are precisely the same strategy. The reason this statement is generally accepted by many investors is that they have the same risk-reward profiles or profit and loss graphs:   In this article, other similarities will be discussed as well as some distinct differences […]

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covered cakll writing with the Dow 30 stocks

Using Multiple Premium Reports to Fund our Covered Call Writing and Put-Selling Portfolios

Stock and ETF (exchange-traded fund) selection is one of the three required skills needed to achieve the highest level of success when selling options. Covered call writers and put-sellers have varying degrees of personal risk tolerance and trading styles. As a result, over the years and based on member feedback, the BCI team has added […]

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