Never sell a covered call or cash-secured put option if there is an upcoming earnings report prior to contract expiration. I have been emphasizing this rule for over a decade in my books, DVDs, seminars and videos. There are times, however, when we have confidence in positive earnings reports based on historical data. In these rare cases, […]
Covered Call Writing and Inverse ETFs: Generating Cash in Extreme Bear Markets
Inverse Exchange-Traded Funds (ETFs) use derivatives to bet against the direction of financial markets. These are known as short or bear ETFs and will make money if markets decline in value. They will lose money, however, if markets move against the bet. Covered call writers who have a bearish market outlook may find these funds […]
Using Out-Of-The-Money Puts and In-The-Money Calls to Manage Bear Markets
Strike price selection should be a focus when selling call and put options. With the stock market bearish and volatile at the start of 2016, this article will highlight how such choices will offer significant protection while still allowing for compelling returns. The stock I selected to demonstrate the main points is Adobe Systems, Inc., […]
Option Liquidity: When Is Vol(ume) Greater Than Open Interest?
Check the options chain before selling a covered call or cash-secured put. In addition to determining the premiums and returns we will generate we also need to make sure the interest or liquidity in these options will be adequate enough for favorable trade executions. Below is a typical options chain showing both Vol(ume) and open interest (OI): […]
Combining Technical Analysis And Market Assessment To Determine Strike Selection
Mastering stock and strike price selection are key components in successful covered call writing. There is no one factor that will dictate our choices but rather a mosaic of bits of information which will lead us to the best selections. In this article, I will discuss two of those critical components: technical analysis of the […]
Achieving The Highest Covered Call Writing Returns Using The Blackjack Analogy
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 […]
Selecting A Specific Strike Price For Our Covered Call Positions
We must master strike price selection to maximize our covered call writing returns. In our BCI methodology, strike price selection is ultimately determined after our careful stock screening analysis and overall market assessment. By developing a watchlist of eligible candidates with elite fundamentals and strong price chart technicals along with passing our common sense screens […]
Rolling Out And Up To Capture Share Appreciation: A Good Idea?
Covered call writing has some drawbacks as do all investment strategies. Profit limitation by the strike price is one such disadvantage. How do we manage a situation where the price of the stock moves well above the strike sold? Some covered call writers will roll out and up (to a higher strike price and a […]
Stock Option Expiration Cycles: Beware Of Expiration Dates
In the BCI methodology for covered call writing we use predominantly 1-month options. The reasons are as follows: Generate the highest annualized returns Allows us to avoid earnings reports, a key rule in the BCI methodology Keep our obligation to a short-term time frame allowing us to keep only the best current performers in our […]
Using LEAPS Covered Calls to Increase Dividend Yield
Innovative covered call writers can develop ideas of implementing a strategy in unconventional ways. For example, we can invest in a money market or CD and perhaps not even beat the inflation rate with those dividends. We can buy a quality bond and wait six months to receive our first (ho-hum) return. Covered call writers can […]
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
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