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An Annualized Return of 5000% and Feeling Miserable: Interpreting Our Covered...
Whether we are using covered call writing, put-selling or any other investment strategy, investor interpretation of results is an interesting topic to analyze. Is the glass half-full or half-empty? On...
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Should We Add a Short Put to Our Collar Trades?
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....
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“Hitting a Double” or “Mid-Contract Unwind Exit Strategy”: Which Exit...
Mastering exit strategies is the 3rd required skill for successful covered call writing and put-selling. On November 28, 2018, Nirav wrote to me regarding a series of trades he executed and wanted to...
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In-The-Money Covered Calls: Intrinsic Value Protects Time Value: A Real-Life...
Meaningful option calculations are essential in determining if the premiums meet our covered call writing goals. To this end, we must understand the mathematics of these calculations to become elite...
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Interpreting Exit Strategy Calculations Versus Final Calculations
Mastering option calculations is an essential skill needed to attain the very highest covered call writing returns. Although the Ellman Calculator will do most of the heavy lifting for us,...
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Blackjack and Covered Call Writing: Throwing the Odds in Our Favor with...
Covered call writers and all investors using stock options strategies have one thing in common: we all want to achieve the highest possible returns within the framework of our own personal risk...
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Rolling Up in the Same Contract Month: A Real-Life Example with KMX
Position management or exit strategies for covered call writing and selling puts is the third required skill to achieve the highest possible return levels (stock and option selection are the first...
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Delta as the Sole Criteria for Covered Call Writing Strike Selection
Strike selection is the second required skill when writing covered call options or selling cash-secured puts. Over the years I have been asked to suggest a specific Delta for strike selection implying...
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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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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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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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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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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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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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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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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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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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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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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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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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