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 […]
“Hitting a Double” on the Last Day of a Contract
Exit strategies for covered call writing are critical components to our overall success. One of the strategies available to us is hitting a double. This is where we buy back the short call and wait for the stock price to recover allowing us to re-sell the same option. This creates 2 income streams in the […]
20%/10% Guidelines for Covered Call Writing and Put-Selling: Same Name, Different Circumstances
Exit strategies for our covered call writing and put-selling portfolios allow us to mitigate potential losses and enhance gains to even higher levels. In my books and DVDs, I detail the 20%/10% guidelines as one of the exit strategies available to us for both strategies. Although the name is the same, the circumstances are different […]
“Hitting a Double” Using a Lower Strike Price
One of the exit strategies for covered call writing that allows us to enhance portfolio returns is known in the BCI community as “hitting a double”. We implement this position management technique when option value meets our 20%/10% guidelines. The initial short call is closed (buy-to-close) as share value declines early to mid-contract and then […]
Factors to Consider When Closing a Trade Early: A Real-Life Example with ATVI
Exit strategies for covered call writing includes closing a trade when share price rises above the original strike price sold. When formulating these decisions, we must factor in the cost-to-close as it relates to the opportunity to generate more profit. On November 8, 2017, Marion shared with me a trade with Activision Blizzard, Inc. (NASDAQ: […]
Why the 3% Guideline Applies to Puts but Not to Call Options
Selling options (covered call writing and selling cash-secured puts) will result in a positive outcome in the first four of the following five scenarios: Stock price moves up significantly Stock price moves up slightly Stock price remains the same Stock price moves down slightly (less than option premium) Stock price moves down substantially Although it […]
20%/10% Guidelines: Calculating Cost Basis and Option Premium After Rolling Out And Up
Exit strategies or position management for covered call writing and selling cash-secured puts is one of the three required skills we must master to achieve the highest levels of success. One of the most important strategies we employ is the 20%10% guidelines which guide as when to buy back a covered call option: When option value […]
Cost To Close Our Short Option Positions: Calls and Puts
After entering our covered call writing or put-selling positions, we immediately prepare for possible exit strategy opportunities. All exit strategies begin by buying back the option, call or put. These position management techniques are used to mitigate losses, turn losses into gains and enhance winning positions to even higher levels. This is the reason we need […]
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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