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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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The Poor Man’s Covered Call: Rolling Options in the Current Contract Month – December 19, 2020
Exit strategies are critical to our overall success whether using traditional covered call writing or the Poor Man’s Covered Call (PMCC). In this article, we will evaluate scenarios when...
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