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 […]
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 […]
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 […]
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 […]
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 […]
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 […]
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, […]
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 […]
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 […]
Covered Call Writing, Leveraged ETFs, Weekly Options and Protective Puts
Traditional covered call writing consists of buying a stock or exchange-traded fund (ETF) and selling a call option to generate cash flow. Frequently BCI members will think outside the box and add additional strategies and products to create a covered call writing-like strategy. The goal in these cases is not to complicate a realtively straightforward […]
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The New Stock Market- Algorithmic and High Speed Trading
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Options That Expire Weekly and Conventional Expiration Cycles
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Why the 3% Guideline Applies to Puts but Not to Call Options
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Earnings Pre-Announcements Explained and Categorized
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Tax Implications of Writing Covered Calls against Long-Term Holdings
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Terry Hi Jay and Hoyt; Question for you Jay: "
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