Using Technical Analysis for Our Stock & Option Selection in Covered Call Writing Trades

In our BCI methodology, we have a 3-pronged approach to stock selection for our covered call writing trades: Fundamental analysis Technical analysis Common-sense principles (minimum trading volume, avoiding earnings reports, among others) We use a mosaic of all 3 parameters for our choices, where no one category is the sole determining factor. That said, this article will focus in on technical analysis and how it is leveraged in our non-emotional decisions. We will use 2 real-life examples with: Axcelis Technologies, Inc. (Nasdaq: ACLS) Crocs, Inc. (Nasdaq: CROX) BCI Premium Stock Report dated 3/31/2023 (partial) ACLS-CROX: BCI Premium Report on 3-31-2023 Comparing ACLS and CROX Similarities Price ($126 – $133) Industry rank (A/A) Weeks eligible in BCI Stock Reports (12/15) Beta (1.75/1.84) Differences Industry (Chips/Apparel) Technical overview (CROX in bold/ ACLS not in bold) Bullish technical chart for CROX CROX Price Chart on 4-3-2023 Mixed technical chart for ACLS ACLS Price Chart on 4-3-2023 Conclusion and discussion Stock side If deciding between these 2 securities, all other indicators being equal, we would favor CROX over ACLS because of a stronger price chart. Option side We would lean more aggressive with CROX for our strike selections, favoring out-of-the-money (OTM) calls and more defensive for ACLS favoring in-the-money (ITM) calls. It is certainly appropriate to use a mix of OTM & ITM. For example, if we were selling 5 contracts of each, it would be reasonable to sell 4 OTM and 1 ITM for CROX and vice-versa for ACLS. We could also use ratios of 3/2 and 2/3. The actual ratios applied would be dependent on our overall market assessment and personal risk-tolerance. Premium member benefits video 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: Alan, Great reports! You always include very pertinent information; your market outlook is very helpful and really useful. I am bullish, but the market seems skittish with the debt ceiling. Thanks again, Your very happy premium member, John Upcoming events 1. Mad Hedge Investors & Traders Summit Covered Call Writing Blue-Chip Stocks and ETFs September 13, 2023 12 PM ET Zoom event: Covered call writing is a low-risk option-selling strategy. The degree of our liability is directly related to the implied volatility of the underlying securities. Growth and technology companies tend to create greater exposure to the downside than blue-chip companies like those located in the Dow 30 and S&P 500. However, the former will generate higher premium returns. Only you can decide which underlying securities are most appropriate for your portfolios. This presentation will review option basics, highlight covered call writing and demonstrate a methodology to select the best-performing Dow 30 and S&P 500 securities to facilitate the implementation of our option-selling and cash-generating strategies. Real-life examples will be presented using recent BCI Premium Stock and ETF reports. Real time Q&A via chat box questions will be available throughout the entire webinar. Register for free here. 2. Orlando Money Show Live Event 45-minute workshop: Monday October 30th 2:10 PM ET – 2:55 PM ET Selling Cash-Secured Puts and Strategy Choices After Exercise 2-hour Master’s Class: Tuesday October 31st 9:30 AM ET – 11:30 AM ET How to Master Covered Call Writing: A detailed start-to-finish analysis using real-life examples. Details & Registration information here. 3. AAII Orange County, California Chapter AAII Investment Club members only Saturday November 11, 2023 Details to follow. Alan speaking at a Money Show event********************************************************************************************************************* [Image] Here are Some More Investing Tips and Resources. Enjoy! Sponsored [Using Technical Analysis for Our Stock & Option Selection in Covered Call Writing Trades]( In our BCI methodology, we have a 3-pronged approach to stock selection for our covered call writing trades: Fundamental analysis Technical analysis Common-sense principles (minimum trading volume, avoiding earnings reports, among others) We use a mosaic of all 3 parameters for our choices, where no one category is the sole determining factor. That said, this article will focus in on technical analysis and how it is leveraged in our non-emotional decisions. We will use 2 real-life examples with: Axcelis Technologies, Inc. (Nasdaq: ACLS) Crocs, Inc. (Nasdaq: CROX) BCI Premium Stock Report dated 3/31/2023 (partial) ACLS-CROX: BCI Premium Report on 3-31-2023 Comparing ACLS and CROX Similarities Price ($126 – $133) Industry rank (A/A) Weeks eligible in BCI Stock Reports (12/15) Beta (1.75/1.84) Differences Industry (Chips/Apparel) Technical overview (CROX in bold/ ACLS not in bold) Bullish technical chart for CROX CROX Price Chart on 4-3-2023 Mixed technical chart for ACLS ACLS Price Chart on 4-3-2023 Conclusion and discussion Stock side If deciding between these 2 securities, all other indicators being equal, we would favor CROX over ACLS because of a stronger price chart. Option side We would lean more aggressive with CROX for our strike selections, favoring out-of-the-money (OTM) calls and more defensive for ACLS favoring in-the-money (ITM) calls. It is certainly appropriate to use a mix of OTM & ITM. For example, if we were selling 5 contracts of each, it would be reasonable to sell 4 OTM and 1 ITM for CROX and vice-versa for ACLS. We could also use ratios of 3/2 and 2/3. The actual ratios applied would be dependent on our overall market assessment and personal risk-tolerance. Premium member benefits video 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: Alan, Great reports! You always include very pertinent information; your market outlook is very helpful and really useful. I am bullish, but the market seems skittish with the debt ceiling. Thanks again, Your very happy premium member, John Upcoming events 1. Mad Hedge Investors & Traders Summit Covered Call Writing Blue-Chip Stocks and ETFs September 13, 2023 12 PM ET Zoom event: Covered call writing is a low-risk option-selling strategy. The degree of our liability is directly related to the implied volatility of the underlying securities. Growth and technology companies tend to create greater exposure to the downside than blue-chip companies like those located in the Dow 30 and S&P 500. However, the former will generate higher premium returns. Only you can decide which underlying securities are most appropriate for your portfolios. This presentation will review option basics, highlight covered call writing and demonstrate a methodology to select the best-performing Dow 30 and S&P 500 securities to facilitate the implementation of our option-selling and cash-generating strategies. Real-life examples will be presented using recent BCI Premium Stock and ETF reports. Real time Q&A via chat box questions will be available throughout the entire webinar. Register for free here. 2. Orlando Money Show Live Event 45-minute workshop: Monday October 30th 2:10 PM ET – 2:55 PM ET Selling Cash-Secured Puts and Strategy Choices After Exercise 2-hour Master’s Class: Tuesday October 31st 9:30 AM ET – 11:30 AM ET How to Master Covered Call Writing: A detailed start-to-finish analysis using real-life examples. Details & Registration information here. 3. AAII Orange County, California Chapter AAII Investment Club members only Saturday November 11, 2023 Details to follow. Alan speaking at a Money Show event********************************************************************************************************************* [Continue Reading...]( [Using Technical Analysis for Our Stock & Option Selection in Covered Call Writing Trades]( And, in case you missed it: - [Rhumbline Advisers Sells 15,041 Shares of Sunrun Inc. 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