Covered call writing dilemmas can frequently result from positive circumstances. In August 2017, Vincent shared a trade he executed where an out-of-the-money strike was sold and share price had moved up significantly and was approaching the strike price. This means that Vincent realized an initial option premium return plus had an unrealized share appreciation component […]

Protecting Unrealized Profits When Share Price Accelerates
Posted on March 10, 2018 by Alan Ellman in Covered Call Exit Strategies, Exit Strategies, Investment Basics, Option Trading Basics, Options Calculations, Stock Investing, Stock Option Strategies, Technical Analysis

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 […]

20%/10% Guidelines: Calculating Cost Basis and Option Premium After Rolling Out And Up
Posted on January 28, 2017 by Alan Ellman in Covered Call Exit Strategies, Exit Strategies, Investment Basics, Option Trading Basics, Options Calculations, Stock Option Strategies
Exit strategies or position management for covered call writing and selling cash-secured puts is one of the three required skills we must master to achieve the highest levels of success. One of the most important strategies we employ is the 20%10% guidelines which guide as when to buy back a covered call option: When option value […]

Over-Trading Our Option Positions: Good for Brokers, Not Good For Us
Posted on January 14, 2017 by Alan Ellman in Covered Call Exit Strategies, Exit Strategies, Investment Basics, Option Trading Basics, Options Calculations, Options Trade Execution, Stock Option Strategies
Exit strategies for covered call writing are essential for achieving the highest levels of success. In the BCI methodology, we have a series of guidelines that assist us in determining which position management techniques should be instituted and when we should consider them. Not taking appropriate action when responses to changes in our stock and option positions […]

Rolling Options Using the Ellman Calculator
Posted on August 13, 2016 by Alan Ellman in Covered Call Exit Strategies, Exit Strategies, Investment Basics, Option Trading Basics, Options Calculations, Stock Option Strategies
Covered call writing and put-selling are strategies that require us to master three skills: stock selection, option selection and position management or the use of exit strategies. One of the exit strategies available to us as expiration approaches is rolling options where the near-month option is closed (buy-to-close) and the next month’s option is sold […]

Why and When We are NOT Losing Money If We Buy Back an Option for More Money than We Received
Posted on July 16, 2016 by Alan Ellman in Covered Call Exit Strategies, Exit Strategies, Option Trading Basics, Options Calculations, Options Trade Execution, Stock Option Strategies
Exit strategies for covered call writing and selling cash-secured puts all start with buying back the option. Frequently, the cost to close our short option positions will be less than the premium generated initially from the option sale. This is because of the impact Theta (time value erosion) has on our option premiums. However, students […]

LEAPS and Covered Call Writing: A Review and a Hypothetical Example/ Contest Application
Posted on October 31, 2015 by Alan Ellman in Option Trading Basics, Options Calculations, Stock Option Strategies
A covered call writing-like strategy involves buying deep in-the-money LEAPS options and then selling short-term slightly out-of-the-money call options. Leaps become a stock surrogate. The term Leaps stands for Long Term Equity AnticiPation Security. They have expiration dates up to 2 1/2 years out. Defining spreads Technically, covered call writing with LEAPS is known […]

Rolling Out Decisions: Evaluating a Real Life Trade
Posted on August 1, 2015 by Alan Ellman in Covered Call Exit Strategies, Exit Strategies, Investment Basics, Option Trading Basics, Options Calculations, Stock Option Strategies
Rolling options is an important exit strategy choice when selling covered call and put options. Options can be rolled up and down in the same contract month or a future contract month. For the most part, we roll down in the same contract month and roll out or out-and-up in the next contract month. I […]

Rolling Up in the Same Contract Month: Evaluating a Real-Life Trade
Posted on July 25, 2015 by Alan Ellman in Covered Call Exit Strategies, Exit Strategies, Options Calculations, Stock Option Strategies
Mastering exit strategies is one of the three required skills for covered call writing as well as selling cash-secured puts. In this article I will review and evaluate a real-life trade executed by one of our members. The trade involves rolling up in the same contract month with BWLD when share price accelerates significantly. […]

Evaluating Returns When Rolling Out And Up
Posted on March 28, 2015 by Alan Ellman in Covered Call Exit Strategies, Exit Strategies, Option Trading Basics, Options Calculations, Options Trade Execution, Stock Option Strategies
Covered call writing and put-selling calculations must be accurate and preferably understood by option-sellers. I created the Ellman Calculators to facilitate the authentic computations we depend on. In this article, I will review a successful trade executed by one of our members, David L, who used UTHR from our Premium Running list as the underlying […]
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Selecting Deep In-The-Money Strikes: A Real-Life Example April 21, 2018
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Writing Naked Calls on Poorly-Performing Stocks April 14, 2018
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Ask Alan #145 – Evaluating a Losing Covered Call Trade April 11, 2018
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Inverse Exchange-Traded Funds versus Shorting Stocks April 7, 2018
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Reasons for Early Exercise March 31, 2018
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The New Stock Market- Algorithmic and High Speed Trading January 15, 2011
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Options That Expire Weekly and Conventional Expiration Cycles September 26, 2010
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Why the 3% Guideline Applies to Puts but Not to Call Options July 15, 2017
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Earnings Pre-Announcements Explained and Categorized July 22, 2017
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Tax Implications of Writing Covered Calls against Long-Term Holdings July 8, 2017
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