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Adjusting Our Portfolio Mix to Achieve Diversification and Cash Allocation – March 15, 2021
To decrease portfolio risk for our covered call writing and put-selling portfolios we must be well-diversified and allocate a similar amount of cash per position. The allotment of cash...
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Establishing Our Cost-Basis for Long-Term Holdings – March 8, 2021
When we initiate a covered call trade by first buying a stock and then selling a call option, our cost-basis, in the BCI methodology, is the lower of the...
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How to Select the Best Strike Prices for Collar Trades: Real-Life Example with Advanced Micro Devices, Inc. (NASDAQ: AMD) – March 1, 2021
Covered call writing is associated with 2 legs: we are long the stock and short the call option. If we add a protective put, we have converted the covered...
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Poor Man’s Covered Call: Selecting the Best LEAPS Strike – February 22, 2021
The Poor Man’s Covered Call (PMCC) is a covered call writing-like strategy where deep in-the-money LEAPS options are used in lieu of long stock positions. Short-term out-of-the-money call options are sold...
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Establishing Our Cost-Basis When Rolling Out-And-Up on 2 Different Days – February 15, 2021
One of our covered call writing exit strategies is rolling-out-and-up. We use this position management technique when our short call is in-the-money (ITM) as expiration approaches and we decide...
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Spinoffs and Stock Splits: How Multiple Corporate Events Can Impact Share Price – February 8, 2021
Our covered call writing and put-selling positions can be radically impacted by corporate events. In July 2020, Match Group, Inc. (NASDAQ: MTCH) showed extreme price volatility due to 2...
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Establishing Our Cost-Basis in a Multi-Step Managed Trade – February 1, 2021
Covered call writing calculations are meaningful only when the correct stats are entered into our formulas (calculators). The cost-basis of a managed trade can be confusing as stock and...
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Delta and Strike Price Selection – January 25, 2021
Strike price selection is the 2nd of our 3-required skills for covered call writing and selling cash-secured puts. I am frequently asked which Delta to use as a guide to a...
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Exit Strategies are Important but Must Be Timed Properly – January 16, 2021
Exit strategy execution for covered call writing and put-selling is the 3rd required skill needed to achieve the highest returns (stock and option selection are the other two). Knowing...
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Special Cash Dividends and Equity Distributions: Understanding Contract Adjustments – December 26, 2020
Contract adjustments to the terms of our covered call writing and put-selling options are due to corporate actions like mergers and acquisitions, special dividends and stock splits. This article will highlight...
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