Understanding the Greeks, or factors that impact the value of our covered call premiums, is essential to mastering options trading basics and becoming an elite covered call writer. One of the Greeks (although not truly a Greek letter) is Vega, the amount an option price will change for every 1% change in volatility. As the […]

Vega: An Option Greek And How It Impacts Our Option Pemiums
Covered call writing generates monthly cash flow by selling short-term options. The main factor in determining the amount of this premium is the implied volatility (IV) of the underlying security. The effect that IV has on the premium is known as vega, one of the option Greeks. What is vega? Vega is the expected change in […]

Delta and Our Covered Call Writing Decisions
When studying option trading basics and the Greeks we learn about our exposure to risk. Those of us who study options are constantly reading and hearing that delta, one of the Greeks, is one of the most powerful influences over option value. Because of this, I thought it prudent we discuss this subject in greater detail. Definition: Delta […]

Greeks: Factors that Influence our Covered Call Premiums
We have all heard the term “the Greeks” as it applies to stock options. Most of us know that these factors somehow explain how certain parameters can impact the value of an option premium. To avoid facing some members of the BCI community claiming that “this is all Greek to me”, this article will serve as […]

Beta: Another Tool to Enhance our Covered Call Returns
When we defined the Greeks in a previous article concerning investment basics, it included a discussion of the price sensitivity of the option premium as it relates to the underlying equity, time and other factors. One of the rules was that (all other factors being equal) an increase in share volatility will increase an option premium. An equity […]

Theta-Time Decay of our Option Premiums
Educated covered call writers know that it is critical to sell our options early in the 1-month cycle. I always try to sell my options in the first week of a 4-week expiration cycle and no later than the beginning of the second week of a 5-week cycle. The reason has to do with the […]
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