Covered Calls — improving the odds of a modest profit

Mainstream investors buy assets they think will go up.  If the asset price stays the same or goes down the investor gets no profit or a loss.   Covered calls are a way for investors to show a modest profit if:
  1. The asset goes up in price
  2. The asset price stays the same
  3. The asset price drops a relatively small amount


One of the catches (and there are always at least one), is that the investor gives up some upside.  

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2021 Ex-Div: JNK, SJNK, BIL, ITE, TLO, IPE, LAG, TFI, SHM, BMX, WIP, MBG, MWZ, CWB, and Others

2021 Ex-Dividend and Pay Date information from SPDR referenced in this post. 2021 Ex-Dividend Dates 1-Feb 1-Mar 1-Apr 3-May 1-Jun 1-Jul 2-Aug 1-Sep 1-Oct 1-Nov 1-Dec 17-Dec 30-Dec (Potential Excise Distribution) Pay / Distribution Dates 5-Feb 5-Mar 8-Apr 7-May 7-Jun 8-Jul 6-Aug 8-Sep 7-Oct 5-Nov 7-Dec 23-Dec 5-Jan-2022 (Potential Excise Distribution) BABS SPDR Nuveen Barclays Build America Bond ETF (BABS) BIL SPDR Barclays 1-3 Month …

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Dividend Capture

Bond or stock dividends are interesting because they are market discontinuities. Unlike surprising earnings reports, revised analyst ratings, or lawsuits dividends are usually predictable in both amount and timing. You can capture a dividend by just buying and holding onto a investment that offers them, but then you are exposed to the price movements of that instrument.

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Vance’s rules for six figure investing

Big moves usually don’t happen in a day, be patient Don’t fight the market Consider not jumping in or out all at once—no matter which way the market goes there will be something good to be said about it (e.g., at least I got half out…) Regardless of the market trend the chances of an up day tomorrow are always fifty-fifty (post) Don’t buy at …

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Vance’s rules for covered call investing

The word “rules” is a bit harsh, but “guidelines” is too soft. Maximum premium is around ATM Buy-writes held to expiration have delta of 0 above the strike, -1 below the strike Don’t mess around too much with bid/ask spreads Don’t use credit / debit orders for covered call transactions unless it is a very slow moving market or if the spreads are unreasonable. Otherwise …

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