When covered call writing is combined with protective puts the strategy is known as the collar strategy. The short call places a ceiling on gains and the long put represents a floor protecting losses. The two option positions should result in a net credit. Typically, out-of-the-money calls and puts are selected. Covered call writing and […]

The Collar Strategy from a Delta Perspective
Posted on January 6, 2018 by Alan Ellman in Covered Call Exit Strategies, Exit Strategies, Investment Basics, Option Trading Basics, Options Calculations, Put-selling, Stock Option Strategies

Beware of High Premium Returns
Posted on November 18, 2017 by Alan Ellman in Investment Basics, Option Trading Basics, Options Calculations, Options Trade Execution, Stock Option Strategies
Covered call writers and put-sellers must set goals regarding targeted premium returns before entering trades. These objectives are based on personal risk tolerance, market assessment and chart technicals. One of the most flagrant mistakes made by option sellers is to make trade decisions based on the highest premium returns. Covered call writing and put-selling are […]

Determining the Delta of our Strikes Using the Airport Formula
Posted on August 12, 2017 by Alan Ellman in Investment Basics, Option Trading Basics, Stock Option Strategies
“What is the best Delta to use when selling covered call options?” I get this question frequently from the educated core of members from our BCI community. Delta is one of the five option Greeks which are mathematical means of quantifying the risk inherent in our option positions. Delta is one of, what I consider, the “big 3”, with […]

Gamma: The Delta of Delta Impacting Exit Strategy Opportunities
Posted on May 28, 2016 by Alan Ellman in Investment Basics, Option Trading Basics, Options Calculations
Option Greeks are mathematical means of measuring the risk of stock options. One of the least discussed of these factors is Gamma. In this article, we will explore the significance of this Greek and relate it to covered call writing. Gamma defined and explained- Second order price sensitivity Gamma is an estimate of how […]

Delta Defined from Three Perspectives
Posted on April 23, 2016 by Alan Ellman in Investment Basics, Option Trading Basics, Options Calculations, Stock Option Strategies
Delta, one of the major Greeks, correlates the relationship between stock price and option value. Option traders use the Greeks to evaluate the risk inherent in our positions and Delta is a critical tool used to measure that liability. As we study the option literature, many of us have come across three related, but different, definitions […]

Greeks Spreadsheet Showing the Impact of Time to Expiration, Volatility and Stock Price Change on Option Value
Posted on April 9, 2016 by Alan Ellman in Investment Basics, Option Trading Basics, Stock Option Strategies
Covered call writing and selling cash-secured puts involve both buying and selling of call and put options. We are dealing with two types of options as well as utilizing both long and short positions of each. When we factor in the major Greeks, it is important to understand the relationship between time to expiration, stock […]

Delta and Theta and their Impact on our Covered Call and Put-Selling Positions
Posted on March 12, 2016 by Alan Ellman in Covered Call Exit Strategies, Exit Strategies, Investment Basics, Option Trading Basics, Put-selling, Stock Option Strategies
The Greeks play a major role in both covered call writing and selling cash-secured puts. Understanding these factors and tailoring our strategy based on this insight will allow us to elevate our returns to the highest possible levels. In today’s article, we will focus in on Delta and Theta and discuss when they are an […]

Why Would Call Option Value Decline If Stock Price Rises? Evaluating Option Greeks
Posted on December 26, 2015 by Alan Ellman in Investment Basics, Option Trading Basics, Options Calculations, Stock Option Strategies
Covered call writers and put-sellers know that option value is impacted by the change in stock price by the amount of its Delta. Delta, one of the option Greeks, is defined as the amount an option value will change for every $1.00 change in share value. If a call option priced at $2.00 with a […]

Calculating the Greeks Using an Options Calculator
Posted on September 26, 2015 by Alan Ellman in Investment Basics, Option Trading Basics, Options Calculations
The Greeks are a mathematical means of estimating the risk of stock options. Delta measures the change in the option price due to a change in the stock price, Gamma measures the change in the option delta due to a change in the stock price, Theta measures the change in the option price due to […]

Delta And The Moneyness of Options
Posted on May 2, 2015 by Alan Ellman in Exit Strategies, Investment Basics, Option Trading Basics, Stock Option Strategies
Understanding and mastering the Greeks are key factors in becoming an elite covered call writer and put-seller. In this article, I will focus on delta, one of the important Greeks, as it relates to the moneyness of options (in-the-money, at-the-money or out-of-the-money). Let’s start with a review of a few definitions: Definitions Greeks: They are numbers […]
Podcast
- 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
- 94. Covered Call Writing Net Debit Limit Orders
- 93. WHEN CALL STRIKES MOVE DEEP ITM EARLY IN A CONTRACT
- 92. Selling Deep OTM Cash-Secured Puts to Create High-Probability Returns
- 91. Portfolio Overwriting Analyzed
- 90. Entering a Collar Trade
Subscribe To Our Free Newsletter
Categories
- Ask Alan (14)
- Covered Call Exit Strategies (206)
- Exchange-Traded Funds (59)
- Exit Strategies (202)
- Fundamental Analysis (44)
- Investment Basics (528)
- Just Alan (6)
- Option Trading Basics (542)
- Options Calculations (367)
- Options Trade Execution (189)
- paper trading (4)
- Podcasts (102)
- Put-selling (84)
- Stock Investing (114)
- Stock Option Strategies (497)
- Stock Trading & Taxes (19)
- Technical Analysis (47)
- Uncategorized (20)
Recent Posts
- BCI PODCAST 100: Analyzing LEAPS for The Poor Man’s Covered call Strategy (PMCC)
- Technical Analysis for Options: A Real-Life Example with Deckers Outdoor Corp. (NYSE: DECK)
- Establishing 84% Probability of Success Put Trades in Bear Markets
- How to Calculate Dividends into Our Covered Call Writing Calculations
Premium Membership
How Alan Got Started with Stock Options
Why Covered Call Options May Be Your Best Investing Strategy
Nasdaq Interviews Alan Ellman
© 2020 The Blue Collar Investor. All Rights Reserved.
Beginners Corner Enhanced & Updated
- Lesson 1: Beginner's Corner for Covered Call Writing: 2nd Edition
- Lesson 2: Beginner's Corner for Covered Call Writing- 2nd Edition: Option Basics
- Lesson 3: Beginner's Corner for Covered Call Writing- Stock Selection
- Lesson 4: Beginner's Corner for Covered Call Writing-2nd Edition
- Lesson 5: Beginner's Corner for Covered Call Writing
- Lesson 6: Beginner's Corner for Covered Call Writing
- Lesson 7: Beginner's Corner for Covered Call Writing: 2nd Edition
- Lesson 8: Beginner's Corner for Covered Call Writing
- Video 9: Premium Membership
Beginners Corner Selling-Puts
- Lesson 1: What Is Puts Selling?
- Lesson 2: Puts-Selling Option Basics
- Lesson 3:puts-selling-technical analysis
- Lesson 4:puts-selling-Common Sense Considerations
- Lesson 5:puts-selling-Calculating Returns
- Lesson 6:puts-selling-Executing Put-Selling
- Lesson 7:puts-selling- Exit Strategies
- Lesson 8:puts-selling-Mastering Put-Selling
Recent Comments