Fundamentally Sound With An Added Perk: SodaStream [View article]
Hewitt,
I do not personally use this product because I don't drink soda but I know others who do. A SodaStream machine kit comes with a cylinder already full. When empty, it is swapped for an exchange cylinder which sells at a suggested retail price of $14.99 for one 60 liter (25 cents per liter). Adding the cola mix of $4.99 (which makes 12 liters) is another 42 cents per liter. Total cost to make cola is 67 cents per liter or about 25 cents per can. I understand that you will not experience any flat, wasted soda, as you would with store-bought soda, due to the sealed cap. Also, no bottle or can deposits.
There is also the convenience of not lugging, storing or disposing of heavy, bulky cans and bottles. I wrote the article based on fundamentals and option returns but the product does appear impressive.
Covered Call Writing: Using Multiple Exit Strategies In The Same Contract Month [View article]
In my books and DVDs I explain that I use the more bullish exit strategies in the earlier part of the contract cycle and the more bearish ones (rolling down) in the latter part of the cycle. No way of predicting precisely but throwing the odds in our favoring and providing protection to mitigate losses.
You may want to consider my latest book as well, Alan Ellman's Encyclopedia for Covered Call Writing, which has over 70 pages relating to exit strategy execution + another 400 pages relating to all aspects of this strategy.
Covered call writing and selling cash-secured puts are quite similar. There are some nuances that make the strategies slightly different. For example, as a covered call writer and therefore the share holder, you capture corporate dividends, not the put seller. This may be partially offset by the fact that the puts may have more value than the calls in this situation. The most significant difference, in my view, is that as a cc writer, your choices regarding exit strategy execution are far greater and I've actually written an entire book on this one topic. You may want to close your short position and retain the long position and take advantage of the typical whipsaws a stock gyrates through each month. Finally, for reasons I can't explain many brokerages require a higher level of trading approval to sell cash-secured puts rather than covered calls and may not permit the sale of cc puts in self-directed IRA accounts. Overall, both are similar with the main caveat being exit strategy execution choices.
Early exercise of the option the day prior to the ex-dividend date is a concern if the time value of the premium is less than the actual dividend distribution. In this case you may want to roll the option to a later date.
Covered Call Writing: Using Multiple Exit Strategies In The Same Contract Month [View article]
I have no problem with a stop-loss on the short position. As a matter of fact I have set up a 20/10% guideline in my books and DVDs for that very thing. However, in many situations also selling the underlying is NOT the best choice.
Covered Call Writing: Using Multiple Exit Strategies In The Same Contract Month [View article]
This was an example that I took from one of my books to highlight the importance of being prepared with an arsenal of exit strategy choices. It occurred in 2008 when everything was going down!
Covered Call Writing: Using Multiple Exit Strategies In The Same Contract Month [View article]
You do not know in advance how a stock will react. The main point here is that we need to be prepared for all possibilities. I have an exit strategy ready to go for many other situations as well as the one I highlighted in this article. So let's say that "luck" is the intersection of preparation and opportunity.
Covered Call Writing Using The CBOE Volatility Index - VIX [View article]
I use the VIX as ONE of my guides to determine my stance on my covered call positions. I do NOT sells calls on the VIX. For example, all other parameters being equal, a bearish (ascending, above 30) VIX will guide me to using in-the-money strikes, low beta stocks and favor certain ETFs. Please keep in mind this the VIX is one of several indicators I use in my investment decisions but it is an important one.
Covered Call Writing: Generating A Second Income Stream In The Same Month [View article]
It is functional but you will need to scroll down and enter your email address first. Subscribing to the premium membership will give you a FREE version of the Elite version of the calculator with 7 additional tabs. Write me directly if you have a problem:
Covered Call Writing: Generating A Second Income Stream In The Same Month [View article]
The spreadsheet is FREE:
Go to my web site and look for the link at the top of the page (black bar) titled "free resources" The Basic Ellman Calculator and its user guide can be downloaded for FREE.
Setting Up A Covered Call Portfolio-Diversification And Cash Allocation [View article]
Teddi,
We are in full agreement here..."duds" should be avoided. How we define a "dud" and how we screen them out is open to interpretation. Just turn on CNBC any day and watch the experts disagree with each other about every single stock they are discussing. Diversification and cash allocation is a step I strongly believe in only after screening thousands of equities and ETFs fundamentally, technically and adding in several common sense principles like avoiding earnings reports, among others. When the watch list is formulated (you see part of an older watch list in the above article) it contains stocks that are among the strongest fundamentally and technically AND in the top-performing industries. They have also passed the "common sense" screens inherent in the BCI methodology. Then, and only then, do we look at diversification and cash allocation. We may differ on the importance of diversification but absolutely agree on the avoidance of "duds".
Glad you liked the article and appreciate the feedback.
Setting Up A Covered Call Portfolio-Diversification And Cash Allocation [View article]
If diversification is the main goal then, why not just write calls on SPY to avoid all the calculations?
Diversification is not the main goal but rather the final step in the art and science of developing a covered call portfolio. The main goal is to create a monthly cash flow while highlighting the need for capital preservation.
As stated by mjs_28s, individual equities will generate higher returns than ETFs.
Fundamentally Sound With An Added Perk: SodaStream [View article]
I do not personally use this product because I don't drink soda but I know others who do. A SodaStream machine kit comes with a cylinder already full. When empty, it is swapped for an exchange cylinder which sells at a suggested retail price of $14.99 for one 60 liter (25 cents per liter). Adding the cola mix of $4.99 (which makes 12 liters) is another 42 cents per liter. Total cost to make cola is 67 cents per liter or about 25 cents per can. I understand that you will not experience any flat, wasted soda, as you would with store-bought soda, due to the sealed cap. Also, no bottle or can deposits.
There is also the convenience of not lugging, storing or disposing of heavy, bulky cans and bottles. I wrote the article based on fundamentals and option returns but the product does appear impressive.
Alan
Covered Call Writing: Using Multiple Exit Strategies In The Same Contract Month [View article]
Alan
Covered Call Writing With The Qs [View article]
Covered Call Writing With The Qs [View article]
Alan
4 Tech Covered Calls [View article]
Covered Call Writing: Using Multiple Exit Strategies In The Same Contract Month [View article]
Covered Call Writing: Using Multiple Exit Strategies In The Same Contract Month [View article]
Covered Call Writing: Using Multiple Exit Strategies In The Same Contract Month [View article]
Covered Call Writing: Using Multiple Exit Strategies In The Same Contract Month [View article]
Alan
Covered Call Writing: Using Multiple Exit Strategies In The Same Contract Month [View article]
Covered Call Writing Using The CBOE Volatility Index - VIX [View article]
Alan
Covered Call Writing: Generating A Second Income Stream In The Same Month [View article]
alan@thebluecollarinve...
Covered Call Writing: Generating A Second Income Stream In The Same Month [View article]
Go to my web site and look for the link at the top of the page (black bar) titled "free resources" The Basic Ellman Calculator and its user guide can be downloaded for FREE.
Alan
Setting Up A Covered Call Portfolio-Diversification And Cash Allocation [View article]
We are in full agreement here..."duds" should be avoided. How we define a "dud" and how we screen them out is open to interpretation. Just turn on CNBC any day and watch the experts disagree with each other about every single stock they are discussing. Diversification and cash allocation is a step I strongly believe in only after screening thousands of equities and ETFs fundamentally, technically and adding in several common sense principles like avoiding earnings reports, among others. When the watch list is formulated (you see part of an older watch list in the above article) it contains stocks that are among the strongest fundamentally and technically AND in the top-performing industries. They have also passed the "common sense" screens inherent in the BCI methodology. Then, and only then, do we look at diversification and cash allocation. We may differ on the importance of diversification but absolutely agree on the avoidance of "duds".
Glad you liked the article and appreciate the feedback.
Alan
Setting Up A Covered Call Portfolio-Diversification And Cash Allocation [View article]
Diversification is not the main goal but rather the final step in the art and science of developing a covered call portfolio. The main goal is to create a monthly cash flow while highlighting the need for capital preservation.
As stated by mjs_28s, individual equities will generate higher returns than ETFs.
Alan