covered call

  The federal tax rules concerning options are among the most complex sections of the tax code. This has led to many misunderstandings. For example, many traders have heard that some covered calls are “unqualified.” What does this mean? It means that in some situations, a trader who has...

The great dilemma for options traders is well known: Options close to expiration cost less but expire soon. Options with more time to develop profitably cost more. How do you balance these conflicting attributes? Trading options very close to expiration and containing little or no time value...

The problem for anyone in the market is the threat of loss. Owning stock means you risk a decline in the price, and this is where some specific options-based protective strategies are exceptionally valuable. One such strategy is the collar. The collar has three parts: 100 shares of stock, a...

What is your return from writing covered calls? The answer: Well, that depends. In order to accurately calculate your return, you need to set a few rules for yourself. These include: Use the same calculation for all of your covered calls. Compare return for different strikes. Annualize returns...

Traders, especially covered call writers, love the forward roll. It helps avoid or defer exercise, creates additional income, and helps keep ownership of stock that is on an uptrend. But there are potential problems. Among these are the following four every covered call writer needs to remember:...

The big appeal of covered calls has always been the double-digit annualized return that is not only possible but likely. Gains come from three sources: capital gains on stock sales, dividends, and option premium. But is it always profitable? No; you can lose money writing covered calls and even...

CSCO is breaking a downtrend that started back in February.  The break is taking place on decent volume.  We just set an alert at 16.10.  If the alert sounds, we will do one of two things: Buy shares of CSCO and sell front month 17 Calls against them Buy a 15/16 front month Call spread