Multiple Applications of the Mid-Contract Unwind (MCU) Exit Strategy: A Real-Life Example with Super Micro Computer, Inc. (Nasdaq: SMCI)

Covered call writing exit strategies allow us to mitigate trade losses and enhance trade profits. On 11/30/2022, Paul shares with me a series of trades he executed with SMCI where a trade turned against him, and he wasn’t sure how to enter it into the BCI Trade Management Calculator. Both legs of the covered call trade were closed with the intention of using the freed-up cash to mitigate the initial losses. What is the mid-contract unwind (MCU) exit strategy? This is a covered call writing exit strategy where both legs of the trade are closed (short call first, then the sale of the stock). It is typically used when share price accelerates and the time-value component of the option approaches $0.00. After closing the entire trade, the cash is used to establish a new income stream. MCU can also be used when share price declines and we decide not to create a scenario where we can “hit a double” (re-sell the same option) or roll-down to a lower strike with the same expiration date. Both are viable alternatives to MCU in this example. MCU means closing both legs of a covered call trade prior to contract expiration. Paul’s SMCI trades 11/28/2022: Buy 200 x SMCI at $94.60 11/28/2022: STO 2 x 12/16/2022 $95.00 calls at $4.65 11/30/2022: BTC the 12/16/2022 SMCI $95.00 call at $1.51 11/30/2022: Sell 200 x SMCI at $87.42 Entering & calculating initial & final trades SMCI: MCU Exit Strategy Blue cells: Trade entries Green oval: Initial and annualized time-value returns based on a 19-day trade Red arrow: 7% guideline is the depreciation price point to consider selling the stock after closing the short call Purple arrow: MCU exit strategy is selected when closing both legs of a covered call trade prior to contract expiration Brown cells: Combined stock and option debit in $ and % stats after executing the MCU exit strategy Blue arrow: A note is made in the TMC Trade Journal regarding the reason for closing the covered call trade Discussion When closing the 2 legs of a covered call trade, we enter the exit strategy as the mid-contract unwind whether it is because share price accelerated exponentially or declined precipitously. In both cases, we close the short call first and then sell the underlying security. Premium Member Benefits Video: This is a great time to join our premium member community with its stock screening and educational (over 250 videos) benefits. We offer more benefits than ever before. For information, click here. For video explanation, click here. Your generous testimonials Over the years, the BCI community has been incredibly gracious by sending our BCI team email testimonials sharing stories as to what our educational content has meant to their families. Moving forward, we have decided to share some of these testimonials in our blog articles. We will never use a last name unless given permission: Hi Alan, For 3 months now (since 12/09/22) I’ve been a BCI member and so far, I’ve already had some solid financial success to speak about. So far, I’ve used the mid-contract unwind twice, entered new positions, rolled down once, and added a collar on 1 tech position to help me sleep better at night…. It’s been financially profitable Your program is the real deal! I’m very grateful! Sincerely, Cory ______________________________ Upcoming events 1.Canadian Virtual Expo Wednesday May 17th at 3:55 PM ET Covered Call Writing: A Streamlined Approach (similar to the recent BCI webinar) Introducing the CEO Strategy for option traders with challenging, busy schedules. Register for free here. 2. Mad Hedge Investor Summit June 14th at 11 AM ET – 12 PM ET Exit Strategy Choices After Exercise of Cash-Secured Puts When we sell cash-secured puts, we are undertaking the contractual obligation to buy shares at the strike price by the expiration date. Typically, we only sell puts on elite-performers that we would be agreeable to own in our portfolio. This presentation will analyze 4 potential exit strategy opportunities to consider should the put option be exercised. Information on the following strategies will be highlighted: Selling the stock Holding the stock in our long-term buy-and-hold portfolio Write a covered call (PCP or “wheel” strategy) Implement the Stock Repair Strategy In addition to these strategies, the following topics will also be included in the webinar: Option basics for selling cash-secured puts Option basics for covered call writing Real-life examples Calculations using the BCI Trade Management Calculator (TMC) Event super discount offer There will be information offered to all levels of options trades, from beginners to advanced. Registration link to follow. 3. Your Mid-Year Portfolio Review Virtual Expo June 27th – 29th, 2023 Ultra-Low Risk Approaches to Covered call Writing and Selling Cash-Secured Puts Details to follow. 4. Wealth365 Investor Summit July 10th -11th Covered Call Writing: Multiple Applications Based on Current Market Conditions Real-life examples with Invesco QQQ Trust (Nasdaq: QQQ) Covered call writing is a low-risk option-selling strategy geared to generating cash flow with capital preservation a key requirement. This presentation will demonstrate how the strategy can be crafted to benefit in all market environments. Market situations highlighted are: Normal to bull markets Bear and volatile markets Low interest-rate environments A popular large-cap technology exchange-traded fund, Invesco QQQ Trust, will be used to establish rules and guidelines to benefit in these market circumstances. Overview of BCI’s 3 best educational packages BCI Package TMC Package NEW: CEO Package More details to follow. Alan speaking at a Money Show event*********************************************************************************************************************** [Image] Here are Some More Investing Tips and Resources. Enjoy! Sponsored [A 100% Win Rate In 2022… Over The Past 6 Years...]( The next 10 minutes could change your life. We’ve recorded a special sit-down interview with a reclusive millionaire who details how he’s closed out winning trade after winning trade throughout the volatility of 2022. In fact, he hasn’t closed a single losing trade since 2016. Sounds impossible? It’s not - and he’ll prove it to you. [Click to see this exclusive sit-down interview.]( [Privacy Policy/Disclosures]( [Multiple Applications of the Mid-Contract Unwind (MCU) Exit Strategy: A Real-Life Example with Super Micro Computer, Inc. (Nasdaq: SMCI)](?site= Covered call writing exit strategies allow us to mitigate trade losses and enhance trade profits. On 11/30/2022, Paul shares with me a series of trades he executed with SMCI where a trade turned against him, and he wasn’t sure how to enter it into the BCI Trade Management Calculator. Both legs of the covered call trade were closed with the intention of using the freed-up cash to mitigate the initial losses. What is the mid-contract unwind (MCU) exit strategy? This is a covered call writing exit strategy where both legs of the trade are closed (short call first, then the sale of the stock). It is typically used when share price accelerates and the time-value component of the option approaches $0.00. After closing the entire trade, the cash is used to establish a new income stream. MCU can also be used when share price declines and we decide not to create a scenario where we can “hit a double” (re-sell the same option) or roll-down to a lower strike with the same expiration date. Both are viable alternatives to MCU in this example. MCU means closing both legs of a covered call trade prior to contract expiration. Paul’s SMCI trades 11/28/2022: Buy 200 x SMCI at $94.60 11/28/2022: STO 2 x 12/16/2022 $95.00 calls at $4.65 11/30/2022: BTC the 12/16/2022 SMCI $95.00 call at $1.51 11/30/2022: Sell 200 x SMCI at $87.42 Entering & calculating initial & final trades SMCI: MCU Exit Strategy Blue cells: Trade entries Green oval: Initial and annualized time-value returns based on a 19-day trade Red arrow: 7% guideline is the depreciation price point to consider selling the stock after closing the short call Purple arrow: MCU exit strategy is selected when closing both legs of a covered call trade prior to contract expiration Brown cells: Combined stock and option debit in $ and % stats after executing the MCU exit strategy Blue arrow: A note is made in the TMC Trade Journal regarding the reason for closing the covered call trade Discussion When closing the 2 legs of a covered call trade, we enter the exit strategy as the mid-contract unwind whether it is because share price accelerated exponentially or declined precipitously. In both cases, we close the short call first and then sell the underlying security. Premium Member Benefits Video: This is a great time to join our premium member community with its stock screening and educational (over 250 videos) benefits. We offer more benefits than ever before. For information, click here. For video explanation, click here. Your generous testimonials Over the years, the BCI community has been incredibly gracious by sending our BCI team email testimonials sharing stories as to what our educational content has meant to their families. Moving forward, we have decided to share some of these testimonials in our blog articles. We will never use a last name unless given permission: Hi Alan, For 3 months now (since 12/09/22) I’ve been a BCI member and so far, I’ve already had some solid financial success to speak about. So far, I’ve used the mid-contract unwind twice, entered new positions, rolled down once, and added a collar on 1 tech position to help me sleep better at night…. It’s been financially profitable Your program is the real deal! I’m very grateful! Sincerely, Cory ______________________________ Upcoming events 1.Canadian Virtual Expo Wednesday May 17th at 3:55 PM ET Covered Call Writing: A Streamlined Approach (similar to the recent BCI webinar) Introducing the CEO Strategy for option traders with challenging, busy schedules. Register for free here. 2. Mad Hedge Investor Summit June 14th at 11 AM ET – 12 PM ET Exit Strategy Choices After Exercise of Cash-Secured Puts When we sell cash-secured puts, we are undertaking the contractual obligation to buy shares at the strike price by the expiration date. Typically, we only sell puts on elite-performers that we would be agreeable to own in our portfolio. This presentation will analyze 4 potential exit strategy opportunities to consider should the put option be exercised. Information on the following strategies will be highlighted: Selling the stock Holding the stock in our long-term buy-and-hold portfolio Write a covered call (PCP or “wheel” strategy) Implement the Stock Repair Strategy In addition to these strategies, the following topics will also be included in the webinar: Option basics for selling cash-secured puts Option basics for covered call writing Real-life examples Calculations using the BCI Trade Management Calculator (TMC) Event super discount offer There will be information offered to all levels of options trades, from beginners to advanced. Registration link to follow. 3. Your Mid-Year Portfolio Review Virtual Expo June 27th – 29th, 2023 Ultra-Low Risk Approaches to Covered call Writing and Selling Cash-Secured Puts Details to follow. 4. Wealth365 Investor Summit July 10th -11th Covered Call Writing: Multiple Applications Based on Current Market Conditions Real-life examples with Invesco QQQ Trust (Nasdaq: QQQ) Covered call writing is a low-risk option-selling strategy geared to generating cash flow with capital preservation a key requirement. This presentation will demonstrate how the strategy can be crafted to benefit in all market environments. Market situations highlighted are: Normal to bull markets Bear and volatile markets Low interest-rate environments A popular large-cap technology exchange-traded fund, Invesco QQQ Trust, will be used to establish rules and guidelines to benefit in these market circumstances. Overview of BCI’s 3 best educational packages BCI Package TMC Package NEW: CEO Package More details to follow. 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