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A Tax Tip For Covered Writers (10:22)

By Lawrence G. McMillan

This article was originally published in The Option Strategist Newsletter Volume 10, No. 22 on November 21, 2001. 

This is not really a year-end tax strategy, but it is something that covered writers who are writing calls against low-cost-basis stock should consider.

Protecting Stocks: Covered Call Writing vs. Put Buying (12:10)

By Lawrence G. McMillan

This article was originally published in The Option Strategist Newsletter Volume 12, No. 10 on May 22, 2003. 

Most people think of covered call writing as at least partial protection against a downside move by their stocks. Of course, buying a put as protection for a stock position affords a lot more protection – in fact, complete protection below the striking price. But call writing is generally more popular because it involves taking in option premium rather than paying it out. Still, there are times when one strategy is clearly superior to the other. This is one of those times. So, in this article, we’ll compare how stock owners should view the two in any environment and then specifically address the current environment.

Lower Your Risk by Buying Options (02:24)

By Lawrence G. McMillan

This article was originally published in The Option Strategist Newsletter Volume 2, No. 24 on December 22, 1993. 

We have often stated that one can reduce the risk of stock ownership by buying call options instead. This, of course, is contrary to what many consider to be "conventional wisdom", in which option purchases are viewed as extremely risky things. As with most investments — and a lot of other things in life — it's a matter of application; every strategy can't be painted with a broad brush. We'll go over the way to make call option buying a lower-risk alternative to buying common stock, and then we'll apply it to a currently popular strategy involving the purchase of the highest-yielding Dow-Jones stocks at year-end.

Call Stupid (21:12)

By Lawrence G. McMillan

This article was originally published in The Option Strategist Newsletter Volume 21, No. 12 on June 29, 2012. 

A"call stupid" is a rather arcane and little-known term, which is used to describe a position in which a trader is long two calls at two different strikes (probably with the same expiration date). It is often offset by a short position in the underlying security.

Portfolio Protection, Revisited (20:21)

By Lawrence G. McMillan

This article was originally published in The Option Strategist Newsletter Volume 20, No. 21 on November 17, 2011. 

We have written about the subject of protecting a portfolio of stocks with derivatives several times over the years, although it’s been a while (Volume 19, Numbers 6 and 12 had articles on the subject). Recently, some subscribers have inquired about how to calculate the amount of protection they need.

How Implied Volatility Affects A Popular Strategy (09:03)

By Lawrence G. McMillan

This article was originally published in The Option Strategist Newsletter Volume 9, No. 3 on February 10, 2000. 

We have often spoken about how to calculate or interpret implied volatility, and how to relate it to historic volatility. Some of these discussions have bordered on the theoretical, while others have been quite practical. However, we haven’t really addressed how implied volatility affects a specific option strategy.

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