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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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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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