Evaluating a Series of Multi-Rolling Covered Call Trades: A Real-Life Example with Elevance Health Inc. (NYSE: ELV)

In this article, we will analyze a series of covered call trades shared with me by a BCI premium member. These trade executions involve establishing a bullish covered call position, then rolling-down and then rolling-out. All of our trades serve as learning opportunities and these ELV trades are no exceptions. ELV trades from 11/7/2022 to 12/1/2022 11/7/2022: Buy 200 x ELV at $532.09 11/7/2022: Sell 2 x 12/16/2022 $530.00 calls at $26.50 (bullish near-the-money strike) 11/11/2022: ELV trading near $490.00 11/11/2022: BTC 2 x 12/16/2022 $530.00 calls at $4.30 11/17/2022: ELV declines to $477.00 11/17/2022: STO 2 x 12/16/2022 $490.00 calls at $9.12 (rolling-down) 12/1/2022: ELV trading at $529.50 (missed a “hitting a double” opportunity) 12/1/2022: BTC 2 x 12/16/2022 $490.00 calls at $41.00 12/1/2022: STO 2 x 12/30/2022 $530.00 calls at $10.40 (rolling-out for a net debit of $30.60) BCI Trade Management Calculator showing initial trade structuring and rolling-down adjustments ELV: Initial Calculations and Rolling-Down Exit Strategy #1: Initial trade entries #2: Initial returns (4.61%; 42.03% annualized based on a 40-day trade). The downside protection of 0.39% is negligible as we are using a near-the-money strike #3: Rolling-down trade entries (shares cannot be worth more than the new rolled-down $490.00 strike) #4: Final post adjustment option return after rolling-down: 5.89% #5: Post adjustment unrealized stock loss (-7.91%) and net stock and option unrealized loss (-2.02%) BCI Trade Management Calculator showing rolling-out initial trade status ELV: Rolling-Out Calculations Note the following: The value of the shares at the time of the roll was $490.00, the previous contract strike or our obligation to sell at that price The BTC-STO net premium was -$30.60 (-6.24%) The success of this trade depends on upside potential (8.16%), if share price moves up to or beyond the $530.00 strike Discussion and lessons learned The BTC on 11/11 was excellent (near our 20% guideline) The BCI guideline is that prior to the last 2 weeks of a monthly contract after breach of the 20%/10% guidelines, we seek to “hit a double” if share price recovers (may have worked out in this case). If not, we roll-down in the last 2 weeks of that contract By rolling -down on 11/17, a share loss of $42.09 was locked in ($532.09 – $490.00) On 12/1, $41.00 was paid to make shares worth $39.50 more ($529.50 – $490.00). It is possible, another $0.50 could be gained, if share price moves up to or beyond the $530.00 strike but no more due to the contract obligation to sell at $530.00 Whether share price moves to $532.00 or $535.00 or $1000.00, shares can only be worth $530.00, the new strike Over the past 25 years, I have made every mistake in the books and learned from them. This process has allowed me to develop the skillsets I wish for all our members. 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: I have finished my Ask Alan Videos finally and am going through the updated courses now and then the next thing on my list is to start using the Trade Management System once I get a comfort level with that, I will contact you to see what makes sense on the coaching front. Thank you again for your products and service they have made me both profitable and have allowed me to free up time to do other things in semi-retirement. Sincerely, Robert ______________________________ Upcoming events 1. American Association of Individual Investors; Austin-San Antonio Chapter Private webinar for chapter members only. Tuesday May 30, 2023, at 8 PM ET For investment groups seeking private webinars, send an email request to: info@thebluecollarinvestor.com 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 11:20 AM ET – 12 PM ET Ultra-Low Risk Approaches to Covered call Writing and Selling Cash-Secured Puts Adding Delta and Implied volatility to existing defensive concepts Covered call writing and selling cash-secured puts are low-risk, option-selling strategies focused on generating cash-flow. Our trades can be structured to represent aggressive or defensive postures or somewhere in between. This presentation will detail how to structure our trades to decrease risk, particularly in bear and volatile market conditions while still generating significant returns. It will also be of interest to investors who have a low personal risk-tolerance but still want to generate higher than risk-free returns. Both Delta (an option Greek) and implied volatility will be spotlighted, and real-life examples will be utilized to demonstrate the process of establishing these conservative trades, while still allowing us the potential to generate significant annualized returns. Registration link 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. 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. Register for free here. Date and time to follow. Alan speaking at a Money Show event*********************************************************************************************************************** [Image] Here are Some More Investing Tips and Resources. Enjoy! Sponsored [Click here to take advantage of the 50% discount! Promo Code: MEMORIAL50]( [Evaluating a Series of Multi-Rolling Covered Call Trades: A Real-Life Example with Elevance Health Inc. (NYSE: ELV)]( In this article, we will analyze a series of covered call trades shared with me by a BCI premium member. These trade executions involve establishing a bullish covered call position, then rolling-down and then rolling-out. All of our trades serve as learning opportunities and these ELV trades are no exceptions. ELV trades from 11/7/2022 to 12/1/2022 11/7/2022: Buy 200 x ELV at $532.09 11/7/2022: Sell 2 x 12/16/2022 $530.00 calls at $26.50 (bullish near-the-money strike) 11/11/2022: ELV trading near $490.00 11/11/2022: BTC 2 x 12/16/2022 $530.00 calls at $4.30 11/17/2022: ELV declines to $477.00 11/17/2022: STO 2 x 12/16/2022 $490.00 calls at $9.12 (rolling-down) 12/1/2022: ELV trading at $529.50 (missed a “hitting a double” opportunity) 12/1/2022: BTC 2 x 12/16/2022 $490.00 calls at $41.00 12/1/2022: STO 2 x 12/30/2022 $530.00 calls at $10.40 (rolling-out for a net debit of $30.60) BCI Trade Management Calculator showing initial trade structuring and rolling-down adjustments ELV: Initial Calculations and Rolling-Down Exit Strategy #1: Initial trade entries #2: Initial returns (4.61%; 42.03% annualized based on a 40-day trade). The downside protection of 0.39% is negligible as we are using a near-the-money strike #3: Rolling-down trade entries (shares cannot be worth more than the new rolled-down $490.00 strike) #4: Final post adjustment option return after rolling-down: 5.89% #5: Post adjustment unrealized stock loss (-7.91%) and net stock and option unrealized loss (-2.02%) BCI Trade Management Calculator showing rolling-out initial trade status ELV: Rolling-Out Calculations Note the following: The value of the shares at the time of the roll was $490.00, the previous contract strike or our obligation to sell at that price The BTC-STO net premium was -$30.60 (-6.24%) The success of this trade depends on upside potential (8.16%), if share price moves up to or beyond the $530.00 strike Discussion and lessons learned The BTC on 11/11 was excellent (near our 20% guideline) The BCI guideline is that prior to the last 2 weeks of a monthly contract after breach of the 20%/10% guidelines, we seek to “hit a double” if share price recovers (may have worked out in this case). If not, we roll-down in the last 2 weeks of that contract By rolling -down on 11/17, a share loss of $42.09 was locked in ($532.09 – $490.00) On 12/1, $41.00 was paid to make shares worth $39.50 more ($529.50 – $490.00). It is possible, another $0.50 could be gained, if share price moves up to or beyond the $530.00 strike but no more due to the contract obligation to sell at $530.00 Whether share price moves to $532.00 or $535.00 or $1000.00, shares can only be worth $530.00, the new strike Over the past 25 years, I have made every mistake in the books and learned from them. This process has allowed me to develop the skillsets I wish for all our members. 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: I have finished my Ask Alan Videos finally and am going through the updated courses now and then the next thing on my list is to start using the Trade Management System once I get a comfort level with that, I will contact you to see what makes sense on the coaching front. Thank you again for your products and service they have made me both profitable and have allowed me to free up time to do other things in semi-retirement. Sincerely, Robert ______________________________ Upcoming events 1. American Association of Individual Investors; Austin-San Antonio Chapter Private webinar for chapter members only. Tuesday May 30, 2023, at 8 PM ET For investment groups seeking private webinars, send an email request to: info@thebluecollarinvestor.com 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 11:20 AM ET – 12 PM ET Ultra-Low Risk Approaches to Covered call Writing and Selling Cash-Secured Puts Adding Delta and Implied volatility to existing defensive concepts Covered call writing and selling cash-secured puts are low-risk, option-selling strategies focused on generating cash-flow. Our trades can be structured to represent aggressive or defensive postures or somewhere in between. This presentation will detail how to structure our trades to decrease risk, particularly in bear and volatile market conditions while still generating significant returns. It will also be of interest to investors who have a low personal risk-tolerance but still want to generate higher than risk-free returns. Both Delta (an option Greek) and implied volatility will be spotlighted, and real-life examples will be utilized to demonstrate the process of establishing these conservative trades, while still allowing us the potential to generate significant annualized returns. Registration link 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. 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. Register for free here. Date and time to follow. Alan speaking at a Money Show event*********************************************************************************************************************** [Continue Reading...]( [Evaluating a Series of Multi-Rolling Covered Call Trades: A Real-Life Example with Elevance Health Inc. 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