BCI Rule: Never write a covered call or sell a cash-secured put if there is an upcoming earnings report prior to contract expiration. All other parameters in our BCI methodology are guidelines, giving the investor some flexibility within the parameters of the system.
Why are earnings reports risky?
- May fall short of consensus estimates (average analyst forecast of company’s earnings and sales)
- May give concerning guidance regarding future earnings and revenue stats
- May not meet the whisper number, the topic of this article
What is the whisper number?
This is the unofficial earnings-per-share forecast of professional traders and fund managers on Wall Street that typically represent high-wealth clients. It may not be the same as consensus estimates. Have you ever seen a company report better-than-expected earnings and sales and offer positive guidance, yet decline in price after the report? I have … many times.
A real-life example with Super Micro Computer, Inc. (Nasdaq: SMCI)
- Background:
- Great run the first half of 2023, huge price growth
- Well positioned in the AI space
- Pre-announced good earnings in late July
- For income traders, high volatility
- Reasonable P/E … lower than the computer industry P/E (price/earnings ratio)
- At least 8 analysts increased their rating and revenue estimates in the run-up…stock was a “Wall Street Darling”
- SMCI has been on and off our BCI premium watchlist since 01/06/23 and failed the week before the earnings release
- Price chart from 5/2/2023 – 8/9/2023

- Note the following:
- From May – beginning of August, SMCI increased in price by > 250%
- SMCI reported earnings on 8/8/2023, after market closed
- The next day (mid-day), SMCI declined by approximately $85.00 per-share or 24% … ouch!
What happened?

You guessed it. A great report that beat market consensus but missed the whisper number. Earnings reports are risky and conservative investors who sell options should be aware of this and trade accordingly. For me, I avoid earnings reports routinely. I learned this lesson years ago after getting hammered too often by disappointing reports.
Discussion
Conservative investors who sell options should strongly consider avoiding earnings reports. Missing consensus estimates concerning guidance and missing the whisper number can lead to substantial losses.
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Your generous testimonials
Over the years, the BCI community has been incredibly gracious by sending our BCI team email testimonials sharing stories as to what our educational content has meant to their families. Moving forward, we have decided to share some of these testimonials in our blog articles. We will never use a last name unless given permission:
Alan,
I love checking in and I have nothing but great things to say. The BCI method is the soundest conservative investing method I have ever found for covered call writing. Your knowledge (so much which is free) is a great service to all in the investing community. Out of respect I hope more people join because very few people ie: websites , YouTubers , etc. offer real information without a catch. The average person can learn so much without a premium membership.
With that being said rough numbers:
January 2023 before I found BCI $2500 in premiums on covered call writing and stock appreciation.
Since then, I average over $8k a month, using the BCI methodology. That represents roughly 5-6% monthly return, probably more because not figuring some of the weekly contracts.
I wonder what would happen if I did this full time?
Thanks again,
John
Upcoming events
1. BCI-Only Webinar: Portfolio Overwriting
Thursday January 11, 2024
8 PM ET – 9:30 PM ET
You can register here, now:
https://www.thebluecollarinvestor.com/event/bci-only-webinar-portfolio-overwriting/
Portfolio Overwriting: Covered Call Writing Our Buy-And-Hold Stocks
Increasing profits and avoiding tax issues
Our buy-and-hold portfolios in non-sheltered accounts are generating 8% – 10% per year. Can we increase these yields by selling stock options while, at the same time, dramatically decreasing the probability of our shares being sold to avoid potential tax implications? The answer is a resounding “yes”. Portfolio Overwriting is a strategy that can benefit millions of investors seeking to enhance portfolio returns using a low-risk covered call writing-like strategy.
Topics discussed
- Brief review of covered call writing
- Option basics
- What is an option-chain?
- Option selection
- Calculating covered call returns: Real-Life examples
- Portfolio overwriting defined
- Pros and cons of portfolio overwriting
- Why early exercise is so rare
- Rolling options
- Role of dividends
- Locating ex-dividend dates
- How to avoid early exercise
- Real-life examples with calculations
- BCI Portfolio Overwriting Calculator
- BCI Trade Management Calculator
- Summary
You can register here, now:
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2. Long Island Stock Traders Meetup Group (private investment club- Part I)
Thursday February 15, 2024
7:30 PM ET – 9:00 PM ET.
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February 22 & 23, 2024
Paris Hotel
Thursday, February 22, 2024, at 4:55 pm – 5:25 pm PST
The PCP (put-call-put or “wheel”) Strategy
Friday, February 23, 2024, at 12:00 pm – 12:45 pm PST
Covered Call Writing: A Streamlined Approach
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Thursday March 14, 2024
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Begin additional segments text here (like testimonials, events, etc.)
Alan,
What do you think about using weekly options for your CEO strategy? I’m thinking it may result in higher returns.
I’d appreciate your thoughts.
Jordan
ps: I have your book and the spreadsheets.
Jordan,
Yes, absolutely.
The advantage, as you state, is the probability of higher annualized returns. The disadvantage is the increase in time commitment of re-establishing CEO portfolios 52 times a year versus 12 times a year.
One more point of interest: Of the 11 Select Sector SPDRs, only XLRE is not associated with weekly options. If this security is one of the top-performers (it is now), then we may need to have a mixed portfolio of mostly weekly expirations with 1 monthly.
Alan
Premium Members,
This week’s Weekly Stock Screen And Watch List has been uploaded to The Blue Collar Investor Premium Member site and is available for download in the “Reports” section. Look for the report dated 12/29/23.
Also, be sure to check out the latest BCI Training Videos and “Ask Alan” segments. You can view them on The Blue Collar YouTube Channel. For your convenience, the link to the BCI YouTube Channel is:
https://www.youtube.com/user/BlueCollarInvestor
Reminder: Premium Member’s pricing is locked into your current rate and will never see a rate increase as long as the membership remains active.
Best,
Barry and The Blue Collar Investor Team
Hello Alan,
As usual, I found your Whisper Numbers article very helpful.
As you mentioned CONSENSUS ESTIMATES as well, I’d like to find a site to see and review the consensus estimates for upcoming Earnings Reporting stocks.
I had visited https://earningswhispers.com/
Earnings Whispers
earningswhispers.com to see these numbers until they altered their web page and now a subscription is needed. My “Inquiring Minds Want to Know” needs can’t justify a large annual cost.
I hope you may be able to direct us to a similar set of statistics that may provide similar details?
Thanks, and as always, I appreciate the services you continue to provide for all members!
Jim
Jim,
Earningswhispers.com still provides this data for free. You need to scroll down.
As an example, if you type in AAPL, you will generate the information in the screenshot below.
CLICK ON IMAGE TO ENLARGE & USE THE BACK ARROW TO RETURN TO BLOG.
Alan
Premium members:
This week’s 4-page report of top-performing ETFs has been uploaded to your premium site. The Select Sector SPDR section is now crafted to align with our streamlined (CEO) approach to covered call writing. The report also lists Top-performing ETFs with Weekly options, mid-week market tone as well as the implied volatility of all eligible candidates.
Premium member video link:
https://youtu.be/EXMO-KwZuJs
For your convenience, here is the link to login to the premium site:
https://www.thebluecollarinvestor.com/member/login.php
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Alan and the BCI team