In May 2020, Gaetan sent me his portfolio positions for the May 2020 contracts. His cash available was $33,000.00 and decided to diversify with 5 different stocks. I thought it would be a useful exercise to look at his positions and analyze what we believe his overall market assessment was at the time of his […]

Analyzing Market Assessment Based on Portfolio Setup
Posted on November 14, 2020 by Alan Ellman in Investment Basics, Option Trading Basics, Options Calculations, Options Trade Execution, Stock Option Strategies

Selling Deep In-The-Money Calls to Exit Stock Positions
Posted on November 2, 2019 by Alan Ellman in Covered Call Exit Strategies, Exit Strategies, Investment Basics, Option Trading Basics, Options Calculations, Stock Option Strategies
Covered call writing is used predominantly to generate cash flow in a low-risk manner. But it can also be used to exit stock positions while mitigating losses in those trades. As an example, I will use a series of trades shared with me by Ashvin on May 16th, 2019. The underlying security was iShares MSCI […]

Blackjack and Covered Call Writing: Throwing the Odds in Our Favor with PayPal Holdings Inc. (NASDAQ: PYPL)
Posted on July 27, 2019 by Alan Ellman in Investment Basics, Option Trading Basics, Options Calculations, Options Trade Execution, Stock Option Strategies
Covered call writers and all investors using stock options strategies have one thing in common: we all want to achieve the highest possible returns within the framework of our own personal risk tolerance. The focus of this site and The Blue Collar Investor is to provide the education and to share ideas that will help […]

Rolling Option Considerations: A Real-Life Example with BEAT
Posted on February 3, 2018 by Alan Ellman in Covered Call Exit Strategies, Exit Strategies, Investment Basics, Option Trading Basics, Options Calculations, Stock Option Strategies
Exit Strategies for covered call writing is the third required skill for successful implementation of this strategy (stock selection and option selection are the first two). This is also known as position management. One of the most common situations we face each month is when the strike price we initially sold is expiring in-the-money (stock […]

Rolling Out-and-Up After Understanding the Math
Posted on December 31, 2016 by Alan Ellman in Covered Call Exit Strategies, Exit Strategies, Investment Basics, Option Trading Basics, Options Calculations, Options Trade Execution, Stock Option Strategies
Elite covered call writers understand the importance of position management in maximizing returns. As a result, I receive a significant number of inquiries regarding exit strategy execution. This article will highlight one such question I received from John which has two components to it. The main item relates to rolling-out-and-up, a frequently-used exit strategy in […]

“Moneyness” Of Call And Put Options: Understanding Strike Prices
Posted on October 4, 2014 by Alan Ellman in Option Trading Basics, Options Calculations, Stock Option Strategies
Strike price selection is such a key part of options trading basics and options calculations. There are 3 types of strike prices for both put and call options: in-the-money, at-the-money (and the closely related near-the-money) and out-of-the-money. Moneyness tells option holders whether exercising will lead to a profit. Moneyness looks at the value of an option […]

Selecting The Best Strike Price
Posted on August 18, 2012 by Alan Ellman in Investment Basics, Option Trading Basics, Options Calculations
In last week’s article concerning option trading basics I highlighted the in-the-money strike in our covered call writing strategy. In this article I will expand our options calculations to all three types of strike prices. First, let’s review each of these categories: Out-Of-The-Money-Strike Prices: There is a reason why these are popular strikes for many investors. […]

THE FACTORS THAT DETERMINE THE VALUE OF YOUR OPTION PREMIUM plus Our Readers Pick their Favorite Stocks
Posted on July 20, 2008 by Alan Ellman in Option Trading Basics
So you sold an options contract for $380 and generated a 3.5% 1-month return. Did you ever wonder how the market determined the value of that contract to be $380? The simple equation that most of us know and understand is the following: Option premium = Intrinsic Value + Time Value To review, let me […]
Podcast
- 80. Using the VIX to Achieve Higher Option-Selling Returns
- 79. Adjusting Target Goals with ETFs
- 78. REITS: Good Covered Call Writing Candidates?
- 77. Buyers Have Rights and Sellers Have Obligations- Covered Call Writing Explained
- 76. 5 Top Myths and Misunderstandings about Covered Call Writing
- 75. Reverse Stock Splits Understanding Contract Adjustments
- 74. Strike Selection Using Technical Analysis and Market Assessment
- 73. Mid Contract Unwind Exit Strategy at the End of a Contract
- 72. Rolling Covered Call Options on Expiration Friday
- 71: Dividend Yield Should Be a Secondary Factor for Covered Call Writing
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Recent Posts
- Using Implied Volatility to Determine Safe Strikes for Portfolio Overwriting: A Real-Life Example with PayPal Holdings, Inc. (Nasdaq: PYPL)
- Rolling Out and Up to ITM and OTM strikes: A Real-Life Example with Invesco QQQ Trust (Nasdaq: QQQ) + Trade Management Calculator Coupon Expires 5/15/2022
- BCI PODCAST 80: Using the VIX to Achieve Higher Option-Selling Returns
- Ask Alan 194: Mitigating Losses by Rolling Down During a Severe Market Decline
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Beginners Corner Enhanced & Updated
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Beginners Corner Selling-Puts
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