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Should I Roll-Out When My Option is DITM Mid-Contract? – April 12, 2021
Exit strategy opportunities for covered call writing must be recognized and acted upon when indicated. It is important to understand when and how to react to these situations and...
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Implied Volatility (IV), IV Rank and IV Percentile: Defined and Practical Applications – April 5, 2021
When writing covered calls and selling cash-secured puts, the implied volatility of the underlying securities is directly related to the premiums we receive and also measures the risk we...
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How to Execute a Covered Call Trade with a Buy/Write Combination Form – March 29, 2021
Covered call trades can be entered by legging-in (2 separate trades) or via the buy/write combination form (1 net trade). When available, the latter is an effective, and perhaps cheaper, way to execute...
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When Our Covered Call Strike Moves $1000.00 In-The-Money – March 22, 2021
This really happened. From March to August 2020, many of the large cap technology stocks were on fire. Thor shared with me a covered call trade he executed with...
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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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