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Tag Archives: protective put
covered call writing with protective puts

Collar Trades When Call Strikes Move Deep In-The-Money: A Real-Life Example with TEAM

In August 2018, Duminda shared with me a successful collar trade he executed with Attlassian Corp (NASDAQ: TEAM). He was considering 2 exit strategies: Closing all legs of the trade and using the cash to enter a new position Allowing assignment and selling the put, if any value at expiration   Initial structuring of Duminda’s […]

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Ellman Calculator

Should We Add a Short Put to Our Collar Trades?

A collar trade is a covered call trade with a protective put. Jim recently wrote to me asking about the efficacy of also selling an out-of-the-money put to help pay for the cost of the protective put. This article will analyze this series of trades to assess the pros and cons of adding that fourth […]

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BCI Collar Calculator

Protective Puts and the Collar Strategy: Selecting the Best Strike Prices/ Last Chance for Holiday Orders

Covered call writing, when combined with protective puts, is known as the collar strategy. The maximum gain is established by the short call strike while the maximum loss is defined by the long put strike. For example, if a stock is purchased for $48.00 per share and the $50.00 call is sold while the $45.00 […]

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technical analysis for covered call writing

How To Generate Cash With Elite Stocks: Three Perspectives

Whether we are writing covered calls, selling cash-secured puts or simply buying and selling stocks, the first important requirement is to develop or have access to a quality watch list of elite-performing securities. Once we have purchased a stock or exchange-traded fund (ETF), our goal is to make a profit. In this article, three approaches […]

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calculating Delta for covered call writing

Using Delta to Determine the Amount of Risk in Our Option-Selling Positions

Covered call writing and selling cash-secured puts are low-risk option-selling strategies used to generate monthly cash flow. Low-risk does not mean no risk so how can we measure the degree of risk we are undertaking? Let’s first all agree that any strategy that aspires to generate higher than a risk-free return (Treasuries, for example) will incur […]

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protective puts and covered call writing

Generating Income on Stocks Already Owned

Covered call writing is a low-risk option-selling strategy that allows us to generate monthly cash flow in sheltered and non-sheltered accounts. One of the main reasons this has been the go-to strategy in the stock portion of my portfolio is related to the fact that the strategy can be crafted to specific investment scenarios and […]

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Protective Puts and Earnings Reports

Never sell a covered call or a cash-secured put if there is an upcoming earnings report. I will continue to repeat this mandate to ensure that new members will not suffer the financial fallout from a disappointing earnings report. There are times, however, when we have so much confidence in a stock which has historically beaten consensus […]

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covered call writing and collars

Protective Puts: Selecting the Best Strike Price

Covered call writing involves buying a stock and selling a call option. When a put is also purchased to avoid significant downside loss, it is referred to as a protective put and the strategy as a whole is referred to as a collar. When a put option is purchased on the same day that a stock is purchased, […]

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Bernie Madoff strategy

What Do Bernie Madoff and Covered Call Writing Have In Common?

Covered call writing is my favorite stock investment strategy and Bernie Madoff is one of the world’s most infamous sociopaths. How can they exist in the same article title? This week, ABC-TV is showing a mini-series documenting the rise and fall of Bernie Madoff and his $65 billion Ponzi scheme. Madoff never actually ever invested the […]

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using options to protect low-cost basis stocks

Using a Zero-Dollar Collar to Protect Low Cost Basis Stocks

Using covered calls and puts in a conservative manner can benefit us in so many ways. In this article I will present a method to protect stocks in our portfolio that have increased in value substantially since they were purchased. We will utilize both covered call writing and protective puts which is known as the […]

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