Setting Up Option Portfolios Using Stock Selection, Diversification, Cash Allocation and Calculations – January 12, 2026
When establishing our covered call writing & cash-secured put portfolios, there are several metrics we should use to minimize risk and enhance our overall returns. This article will identify and explain these critical resources.
Checklist for creating our weekly & monthly option portfolios
- Select only elite-performing securities
- Factor in diversification & cash allocation
- Always have a cash reserve for potential exit strategy opportunities
- Calculate initial trade and portfolio returns to confirm aligning with pre-stated goals and personal risk-tolerance
- After trades are executed, be prepared for exit strategy opportunities
Stock & ETF selection: BCI stock, ETF, Blue Chip reports
Factoring in stock and industry diversification & cash-allocation: The BCI Portfolio Setup Spreadsheet
Initial trade and portfolio calculations: The BCI Trade Management Calculator (TMC)
Discussion
Having the appropriate tools & resources will allow us to establish portfolios consisting of only elite-performing securities which are properly diversified and with a reasonable allocation of cash per-position. We can also ensure that the calculations align with our pre-stated initial time-value return goal and our personal risk tolerance. These, along with the appropriate education and experience (paper-trade first) will set you on a path with the maximum potential for success.
Author: Alan Ellman