Executing Covered Call Trades: The Buy-Write Combination Form.
There are two ways to enter a covered call position. The first is called legging-in where the stock is purchased and then the option is sold. Two distinct trades are executed. The second is known as a buy-write order where the security purchase and option sale is...
Volatility Skew- Understanding Option Premiums Over Different Time Frames and Strikes
In covered call writing, our option premiums are influenced by the volatility of the underlying security. Using the Black Scholes option pricing model, we can calculate the volatility of the underlying by entering the market prices for the options. Common sense would...Implied Volatility and Our Covered Call Writing Premiums
What makes some stock option premiums worth so much more than others? Let’s say we have two stocks, A and B. Both are trading @ $25/share. We look to sell the same month at-the-money $25 strike and one (stock A) returns 2% and the other (stock B) 4%. WHY? The answer...
Out-Of-The-Money Strike Prices: Pros and Cons for Covered Call Writing
Whenever a study is performed on covered call writing a stock is selected and the nearest out-of-the-money (O-T-M) strike price is sold. This is repeated over and over and then the results are compared to the overall market performance. The usual conclusion is that...
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Podcast
- 126. Analyzing the Status of a Rolling-Down Trade
- 124. Dividends and After-Hours News Causing Exercise of OTM Call Strikes
- 123. Implied Volatility, IV Rank and IV Percentile Defined and Practical Applications
- BCI PODCAST 122: Should I Roll-Out My Deep In-The-Money Call Option Mid-Contract?
- BCI PODCAST 121: What is a SPAC (Special Purpose Acquisition Company)?
- 120. Using the Nasdaq-100 Volatility Index (VOLQ) in Covered Call Writing Decisions
- 119. Establishing Our Cost-Basis for Long-Term Holdings
- 118. Adjusting Our Portfolio Mix to Achieve Diversification and Cash Allocation
- 117. When a Covered Call Strike Moves $1000.00 In-The-Money
- 116. How to Execute a Covered Call Trade with a Buy/Write Combination Form