Here is the graphic:. This conclusion assumes that the investor will take no action if the trade turns against him. This is a strategy that should never be employed unless an appropriate arsenal of exit strategies is in place for all possible scenarios. This will include share price depreciation, share price appreciation, dividend distributions, avoiding assignment and contract adjustments.

All this information is detailed in my books and DVDs but is essential to master before using this great strategy as you can see from the graph. Our members have been asking for a DVD Program devoted solely to exit strategy execution and position management. That product is now available in our Blue Collar store and we are offering a deep discount for early ordering:.

DISCOUNT COUPON FOR NEW EXIT STRATEGY DVD PROGRAM. The Companion Workbook contains 47 all-color pages of all charts, graphs and slides used during the presentation. Purchase now for an early bird discount:. Be sure to use this promo code to receive the discount checkout. Premium members have received a promo code via direct email.

Despite a strong week for our stock markets, economic signals were slightly bearish this week as consumers seemed to be spending less and more concerned about reducing debt:.

Managing Risk with Options Strategies: Covered Calls and Protective Puts

Posted on September 14, by Alan Ellman in Covered Call Exit Strategies , Investment Basics , Option Trading Basics , Options Calculations , Stock Investing , Stock Option Strategies. To send us an email, contact us here.

Subscribe to our e-mail newsletter or RSS feed to receive updates. Contact us by phone at Additionally you can also find us on any of the social networks below:. The Weekly Report for has been uploaded to the Premium Member website and is available for download.

You can view them at The Blue Collar YouTube Channel. For your convenience, the BCI YouTube Channel link is:. Since we are in 2 positions short option, long stock the option must be bought back first unless using a buy-write combination form pages — of Encyclopedia…. I may look to sell the same option if the stock recovers or another at a lower strike.

The best approach will depend on overall market assessment and chart technicals.

Covered Call | Formula | Examples

Corporate news may also play a roll unexpected bad news comes out etc. Also, a few weeks ago I wrote an artcile on stop losses that you may find useful on this topic:. Over the next few weeks the stock price dropped as did the option premium. You will see this cash in your account on the payable date which is October 7th. Whenever a dividend is distributed, the price of a stock will decline by the dividend amount.

CLICK ON IMAGE TO ENLARGE AND USE THE BACK ARROW TO RETURN TO BLOG:. My first option cycle is almost complete. Is that reason enough to just dump them and carry on with something on the uptrend? Next months Calls are nicely profitable on both. What would you advise? The reason these stocks were removed from our Premium Running List is due to weakening technicals.

Although the chart is uptrending for KORS there are bearish signals from the MACD histogram, the stochastic oscillator and negative volume diveregnce for the chart shown below for KORS. These are still great companies just not the best of the best at this point in time KORS has made a lot of money for many of our members!

The report also lists Top-performing ETFs with Weekly options.

I just accepted an invitation to speak at the New York Traders Expo the Marriott Marquis Hotel in NYC. The event takes place between February 16thth, I will post my seminar slot once the schedule is set.

Thanks to all of you for your continued support over the years that has allowed me to receive such prestigious invitations. Mail will not be published Required. You can use these tags: Notify me of followup comments via e-mail. You can also subscribe without commenting. Optionally add an image JPEG only. Site Disclosure Statement Glossary Sitemap Timeline. Members Log In About Us Glossary for Covered Call Writing Free Resources including Ellman Calculator Ask Alan Training Videos Free Training Videos Events Calendar Facebook FAQ.

The Blue Collar Investor Learn how to invest by selling stock options. Covered Calls Beginners Corner — Cash-Secured Puts The Blue Hour The Blue Hour For Premium Members. Profit And Loss Graphs For Covered Call Writing. Components of a profit and loss graph. About Alan Ellman Alan Ellman loves options trading so much he has written four top selling books on the topic of selling covered calls, one about put-selling and a sixth book about long-term investing.

Alan is a national speaker for The Money Show, The Stock Traders Expo and the American Association of Individual Investors.

He also writes financial columns for both US and International publications along with his own award-winning blog.. He is a retired dentist, a personal fitness trainer, successful real estate investor, but he is known mostly for his practical and successful stock option strategies. Connect With Us To send us an email, contact us here. Additionally you can also find us on any of the social networks below: Premium Members, The Weekly Report for has been uploaded to the Premium Member website and is available for download.

For your convenience, the BCI YouTube Channel link is: Alan, If the trade breaks below the brekeven 49 in this case when do you consider closing the trade? Carol, Since we are in 2 positions short option, long stock the option must be bought back first unless using a buy-write combination form pages — of Encyclopedia…. Also, a few weeks ago I wrote an artcile on stop losses that you may find useful on this topic: I now seem to be attempting to sell EDU 21 call that is no longer able to be sold.

Your assistance before the end of the month would be greatly appreciated. Keep up the great work with your covered call education. CLICK ON IMAGE TO ENLARGE AND USE THE BACK ARROW TO RETURN TO BLOG: Alan, My first option cycle is almost complete.

Newbie Mike from Alberta Many thanks. Mike, The reason these stocks were removed from our Premium Running List is due to weakening technicals. There are 2 obvious choices now: Congratulations on some great trades!

CLICK ON IMAGE TO ENLARGE AND USE THE BACK ARROW TO RETURN TO THIS BLOG: For your convenience, here is the link to login to the premium site: Check out this link: Looks like the market tone information is from a different time period.

Subscribe Here - Have the latest blog articles sent to your inbox. Subscribe to this articles Comments via RSS Feed. Learn how to take a Screenshot so you can add it to your comment. Leave a Reply Click here to cancel reply. July 15, 8: Washington DC Chapter AAII- Summer Workshop. The New Stock Market- Algorithmic and High Speed Trading January 15, Options That Expire Weekly and Conventional Expiration Cycles September 26, Short Selling: Positives and Negatives January 30, The CBOEs Volatility Index VIX September 11, Penny Pilot Program October 29, MarioG Here is my status and my experiences after Expirat Roni Thanks Barry, I was trying to enter a covered c Barry B Hi Roni, WCN had a 3 for 2 stock split on June Alan Ellman Randal, Yes.

When a strike expires in-the-money Alan Ellman Luis, When I first started with covered call wr. Recommended Investing Links DR. Eric WIsh's Wishing Wealth Blog. Archives Archives Select Month June May April March February January December November October September August July June May April March February January December November October September August July June May April March February January December November October September August July June May April March February January December November October September August July June May April March February January December November October September August July June May April March February January December November October July June May March January December October September August June January December November September August July June May April March February January December November October September August July June May April March January December About BCI The Blue Collar Investor was NOT a brilliant idea of mine….

I was a frustrated blue collar investor just like you.