Exit strategies for our covered call writing and put-selling portfolios allow us to mitigate potential losses and enhance gains to even higher levels. In my books and DVDs, I detail the 20%/10% guidelines as one of the exit strategies available to us for both strategies. Although the name is the same, the circumstances are different […]

20%/10% Guidelines for Covered Call Writing and Put-Selling: Same Name, Different Circumstances
Posted on February 22, 2020 by Alan Ellman in Covered Call Exit Strategies, Exit Strategies, Investment Basics, Option Trading Basics, Put-selling, Stock Option Strategies

Timing Our Covered Call Trades: The Best Time to Sell Our Options After Buying the Stock
Posted on August 31, 2019 by Alan Ellman in Investment Basics, Option Trading Basics, Options Calculations, Options Trade Execution
The goals of covered call writing include generating monthly cash flow and preserving capital. We use every fundamental, technical and common-sense principle available to maximize our profits and protect our cash. Paul A. previously sent me an excellent question that motivated this article: …if the market has a down day and drags down the price […]

Analyzing a Rolling Down Trade During an Extreme Short-Term Market Decline
Posted on April 13, 2019 by Alan Ellman in Covered Call Exit Strategies, Exit Strategies, Investment Basics, Option Trading Basics, Options Trade Execution, Stock Option Strategies
Exit strategy opportunities must be taken advantage of with our covered call writing and put-selling trades. When there is a significant overall market decline in the short-term, there will be losses. Our job, as option-sellers, is to mitigate those losses using our position management skill. On October 20, 2018, Alvin shared with me a series […]

When Should We Execute Our Option-Selling Trades?
Posted on April 6, 2019 by Alan Ellman in Covered Call Exit Strategies, Exit Strategies, Investment Basics, Option Trading Basics, Stock Investing, Stock Option Strategies
The 3-required skills for covered call writing and selling cash secured puts are stock selection, option selection and position management. We can also add timing of our trades as a secondary factor in enhancing our overall returns. These considerations are different for option-selling compared to traditional buy-and-sell portfolios. This article will highlight how and why […]

Buying Low and Selling High Also Applies to Option-Selling
Posted on September 15, 2018 by Alan Ellman in Investment Basics, Option Trading Basics, Options Calculations, Options Trade Execution, Stock Option Strategies
Covered call writers hold two positions. We are long (own) the stock and short (sold) the call option. It is intuitive to investors that it is to our advantage if the stock price accelerates or at least does not decline in value. There are five possible outcomes in the stock portion of our trade: Stock […]

Is There Less Risk Using Deep In-The-Money Long Calls versus Covered Call Writing?
Posted on July 21, 2018 by Alan Ellman in Exit Strategies, Investment Basics, Option Trading Basics, Stock Option Strategies
“There is less risk using deep in-the-money (ITM) long calls than buying stock and selling the corresponding short calls”. That is the case John made to me when I received his email in January 2018. As an example, John used a $100.00 stock and a call premium of $9.00. The basis of his theory was […]

Executing Trades Based on Ex-Dividend Dates
Posted on November 4, 2017 by Alan Ellman in Covered Call Exit Strategies, Exit Strategies, Investment Basics, Option Trading Basics, Options Calculations, Stock Option Strategies
Early assignment of our covered call positions is rare but possible. When it does occur, it is frequently related to an ex-dividend date. These are dates that we must own the shares in order to be eligible to receive the dividend on the distribution date. Premium members can access ex-dates of the eligible stocks in […]

What is the Best Time to Execute Our Trades?
Posted on March 18, 2017 by Alan Ellman in Covered Call Exit Strategies, Exit Strategies, Option Trading Basics, Options Trade Execution, Stock Investing, Stock Option Strategies, Stock Trading & Taxes
Covered call writing and selling cash-secured puts involve buying and selling stocks and options. We work meticulously to do everything possible to throw the odds in our favor to result in successful trades. Achieving the highest level of returns in a low risk manner is one of our mission statements. I have frequently highlighted the three required […]

Exit Strategy Selectivity: Can We Implement Too Many Exit Strategies?
Posted on February 4, 2017 by Alan Ellman in Covered Call Exit Strategies, Exit Strategies, Investment Basics, Option Trading Basics, Options Calculations, Stock Option Strategies
Covered call writers, historically, have ignored exit strategies as part of their investment approach. Certainly, not in the BCI community but most everywhere else. As we become aware of the major financial benefits of mastering the position management skill, we must be mindful of the possibility of over-management. Eating a slice of pizza is enjoyable, eating a […]

Executing Exit Strategies in a Timely Manner
Posted on December 17, 2016 by Alan Ellman in Covered Call Exit Strategies, Exit Strategies, Investment Basics, Option Trading Basics, Options Calculations, Stock Option Strategies
After executing our covered call writing trades, we immediately prepare for position management opportunities…exit strategies. One of these strategies in our arsenal is the Mid Contract Unwind exit strategy. This is used when share value appreciates dramatically resulting in a time value cost-to-close of near zero. In other words, the option originally sold will be […]
Podcast
- 50. Exit strategies Must Be Timed Properly
- 49. Analyzing a Multi Leg Covered Call Rolling Down Series of Trades
- 48. Rolling Deep OTM Cash Secured Puts
- 47. Rolling Up in the Same Contract Month
- 46. Should Delta Be the Sole Criteria for Covered Call Writing Strike Selection
- 45. Implied Volatility and Expected price Movement During the Life of Option Contracts
- 44. Can We Use ITM Strikes to Create a No Risk Covered Call Strategy?
- 43. Converting a Covered Call Trade to a Collar Trade
- 42. Why Was My OTM Put Exercised?
- 41. Collar Trades When Call Strikes Move Deep In The Money
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