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“Hitting a Double” With The Procter & Gamble Co. (NYSE: PG) + 15% Holiday...
After entering our covered call writing trades, we immediately enter our 20% buy-to-close (BTC) limit orders. This will automate the process to close our short calls in the first half of a monthly...
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Protecting Our Covered Call Trades: Protective Puts Versus In-The-Money Strikes
Covered call writing is a low-risk, cash-generating strategy. We can lower the risk to an even greater extent by purchasing protective puts and by writing in-the-money (ITM) call options. Now, buying...
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Rolling Out-And-Up: 6-Week Returns
Option calculations help guide us to an accurate assessment of our covered call writing profits. It’s more meaningful to use percentages rather than dollar amounts when executing these calculations....
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Analyzing Buy/Write Net Debit Limit Orders
Covered call writing trades can be entered by legging-in (buy stock and then sell option) or as a buy/write trade (one net debit limit order). In the latter order, the option premium is deducted from...
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Am I Losing Money When I Buy Back My Deep In-The-Money Strike?
Recognizing successful covered call writing trades is just as important as executing them. On January 17, 2020, Mark wrote to me about a covered call trade that he was analyzing with SolarEdge...
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Managing In-The-Money Strikes When Share Price Moves Higher
When we sell in-the-money call options, we are generating initial time-value profit that meets our stated goals plus creating downside protective of that time-value profit in the form of intrinsic...
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Setting Up a Portfolio of NASDAQ and S&P 500 Stocks In a User-Friendly and...
Many covered call writers and put-sellers favor a portfolio mix of blue-chip and tech companies and turn to the S&P 500 and the Nasdaq exchange for locating the best underlying securities. Since...
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Buyers Have Rights, Sellers Have Obligations: Covered Call Writing in a Nutshell
Covered call writers get paid cash when selling call options. Call buyers pay cash to own the options. This article will highlight the reasons options are bought and sold as it relates to covered call...
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Adjusting Target Goals with ETFs
Exchange-traded funds are baskets of stocks some going up and others going down in price. Generally, this makes these securities less volatile than individual stocks. Lower implied volatility...
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Collar Calculations: Adding Protective Puts to our Covered Call Trades
Covered call exit strategies play a major role in mitigating losses in our BCI methodology. In most cases, we can keep losses to a minimum, turn losses into gains and enhance profits as well. Some...
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Comparing Call and Put Strategies with Paylocity Holding Corporation (NASDAQ:...
Covered call writing or selling cash-secured puts… which is the best strategy? Well, they both offer great opportunities to generate cash-flow in a low-risk manner. I favor the former in normal to bull...
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Comparing ITM Calls and OTM Puts in Bear Markets
Covered call writing and selling cash-secured puts are both outstanding low-risk strategies that can outperform the overall market on a consistent basis. I am on record as favoring covered call...
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Realized Versus Unrealized Capital Gains: A Real-Life Example with GWRE
Covered call writing calculations include initial and final computations. Since our trades incorporate both long stock and short option positions, it can become confusing when determining final capital...
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Should I Unwind My Covered Call Trade 1 Week Prior to Contract Expiration?: A...
Covered call writing exit strategies are critical to our overall success. There are times, however, when the best action is no action at all. On July 25th 2019, Rob shared with me a successful trade he...
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Rolling Decisions on Expiration Friday: A Real-Life Example with Veeva...
Position management is the 3rd required skill for our covered call writing and put-selling success. On 7/19/2019, Larry shared with me a series of trades he executed with Veeva Systems Inc. (NYSE:...
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Evaluating Stock Purchase Price and Breakeven When Rolling Out-And-Up
When we write a covered call, our breakeven is stock purchase price – entire call premium. If we buy a stock for $48.00 and sell an option for $2.50, the breakeven is $45.50. In June 2019, John shared...
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Is This Trade a Winner or a Loser?: A Real-Life Example with XLE
Covered call writers must understand and evaluate the success (or lack thereof) of our trades. Simply stated, are they winners or losers? In June 2019, Van shared with me trades he executed with the...
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Analyzing 4-Day and 2-Month Trades with XBI
Mario was generous in sharing his covered call writing trades with SPDR S&P Biotech ETF (NYSE: XBI). The trades were executed over a 2-month time-frame, the last of which was a 4-day Weekly option....
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Combining In-The-Money Strikes and Stock Dividends to Provide Protection in...
When establishing our covered call writing trades, we must factor in current market conditions to either add protection in bear and volatile environments or to take advantage of normal to bull market...
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Selling Deep In-The-Money Calls to Exit Stock Positions
Covered call writing is used predominantly to generate cash flow in a low-risk manner. But it can also be used to exit stock positions while mitigating losses in those trades. As an example, I will use...
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