Covered call writing can be crafted to meet a myriad of goals in a wide range of market conditions. In May of 2020, the 10-year Treasury Bond yield was 0.65%. Bank interest rates in several countries were negative. At the same time, dividend yield on Dow 30 and S&P 500 dividend-bearing stocks were triple that […]
Earnings Reports and Rolling Options
When we sell a covered call and share price rises dramatically, there is a tendency to roll up in order to capture additional future share appreciation. The most common reason for a gap-up in price is a favorable earnings report. In mid-May 2017 Tim wrote me about a series of trades he executed that involved […]
Covered Calls and Dividends: A Proposed Strategy
Covered call writers must factor in dividends into our investment strategies. More specifically, ex-dividend dates for these are the dates shareholders must own the shares to benefit from the dividend distribution. Call buyers must exercise the option prior to the ex-date to capture the forthcoming dividend. This makes our shares subject to early exercise (exercise […]
Avoiding Earnings Reports: Two Common Sense Perspectives
Never sell a covered call option or a cash-secured put for a stock with an upcoming earnings report. This is one of the most important rules in the BCI methodology. As a matter of fact, most other principles I refer to as guidelines because there is some leeway or flexibility to them. For example, the […]
Earnings Pre-Announcements: Overview and Practical Application
Covered call writers and put-sellers know that options should never be sold when there is an upcoming earnings report prior to contract expiration. This is one of the most important rules in the BCI methodology. The reason is the result of the inherent risk we are subject to from a disappointing report. Since we know […]
How to Use Weeklys and the Premium Stock Reports for Covered Call Writing During Earnings Season
One of the three required skills for covered call writing and put-selling is the selection of the underlying security. Along with this we also must avoid quarterly earnings reports. Since most corporations report earnings in similar time frames (known as earnings season) the number of eligible candidates is dramatically reduced during these time frames. The […]
Earnings Reports And Covered Call Writing In Our BCI Methodology
In our BCI methodology, our covered call writing strategy has several guidelines and one rule. The rule is to never sell a covered call option when there is an upcoming earnings report prior to expiration. Some may ask why not? With the added volatility are our options not going to generate additional premium and if […]
Examining A Covered Call Trade
Mastering covered call writing requires us to learn from our mistakes and not repeating them. We can then utilize a series of guidelines and rules that will guide us to the highest possible returns with the least amount of risk. Maximizing profits with capital preservation in mind is what the BCI methodology is all about. […]
The 10 Most Common Mistakes Made By Covered Call Writers And How To Avoid Them
Your neighbor bursts into your house and exclaims “I just read this article…You buy a stock and sell an option and cash flows into your account instantly. It’s a miracle! I’m getting started tomorrow” If you are a good neighbor and knowledgeable about covered call writing you will immediately tie him to a chair, put tape over […]
Exiting a Covered Call Position Prior to Earnings by Guest Author Laurie Itkin
JUST BECAUSE YOU BUY ITS PRODUCTS DOESN’T MEAN YOU SHOULD BUY ITS STOCK The KORS initial public offering was the topic du jour among my girlfriends at a holiday party last December. The ladies I know who invest in stocks were trying to figure out how to get in on the IPO before the share […]
Podcast
- 104. Special 1 Time Dividends and Contract Adjustments
- 103. The Collar Strategy Using Long-Term Put Expirations
- 102. Analyzing Market Assessment Based on Portfolio Setup
- 101. Covered Call Writing: "Hitting a Double" on the Last day of a Contract
- 100. Analyzing LEAPS for The Poor Man's Covered call Strategy (PMCC)
- 99. Anatomy of a Reverse Stock Split
- 98. Analyzing LEAPS Options for the Poor Man's Covered Call
- 97. Managing Our Poor Man's Covered Call Trades When Share Price Drops Substantially
- 96. Protecting Our Covered Call Trades: Protective Puts and In-the-Money Strikes
- 95. Covered Call Writing to Generate Premium and Dividend Income
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