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There are an index and a bunch of funds that do this already. They do better than the index when the market goes down, and miss some of the fun when the market goes up, as you would expect. Assuming the options are well-priced (and they should be, since they're as liquid as can be), over the...

You're mostly wrong again. I have pretty good insight, so I've gotten a lot of learning from what I suspect is about an average level of experience. I don't know what kind of capitol access I have. I wasn't responsible for burning it down in 1814 or anything, though some have suggested...

Guess again.

What I was trying to explain to you, and what coach sort of hinted at in more words, is that "the stock doesn't expire" is meaningless when you have an expiration looming with either overall position and your position afterward will be the same in either case. Y'know, because they're equivalent.

Which of the two positions doesn't have an option that expires?

Not if the option can't be exercised to capture the intrinsic value.

Looks like you've got some problems there. Your points 1, 3 and 5 are the same thing. And they're still wrong. Put-call parity applies to American options as much as to European. Sure, interest rate is a risk - albeit a negligible one, and you can break parity if the stock becomes unavailable...

There's no margin call because your shares are fully paid. You plunk down 90 bucks for the $100 share and get the balance from the $10 call. In the naked put example, suppose you had 90 bucks in your account and you wrote the 100 put naked for $10. You now have $100 cash money and a naked put...

Curse you. I was supposed to win this thread!

Trade XYZ March 50 puts, of course. :p

I'm developing something called a "wheel". Anyone have a formula for calculating the circumference?

Why not simply buy the 1385 call? That would make your "simple" strategy a little less obtuse. It will run you 10 points intrinsic, and won't ever make money because of the strangle, so whatever time premium you pay for that is a sure loss. In other words, you may as well close out the ATM...

This sounds like a short-term, market-timed position, which makes a spread a bad idea. Spreads make gamma your delta, giving you much less response to small moves in share price. On top of that, spreads double the slippage, making your small profit even smaller. A spread would be better if the...

It's also worth what it's worth now. Forget your cost basis. You are holding some $70 shares. Do you think those shares are going to go up or not? If you don't, you should probably dump them. If you do, you should consider a variety of bullish strategies including the ones you suggested...

Think of what happens at expiration. In either case, if the stock is above the strike price, you are left with nothing in your account but capital gain (the call gets assigned, the put expires worthless). The capital gain is the time premium plus the difference between the stock price and the...

Well, gee. I don't know how I arrived at the conclusion that you were. Maybe you shouldn't use language like "I would highly recommend" when you are not recommending things.

You're highly recommending that beginners start with a strategy that, for ten months out of the year, is "hell" for people who don't know how to manage it? Now I know you're jerking us around.

It means what spin said.

You can explain it with deltas and gammas, but sometimes it's clearer to think about it qualitatively. If an option with two months to go is 10 points OTM, and suddenly the stock drops to 5 points OTM, the option will go up a couple bucks. The stock is getting closer to the money, and it is...

I think your question is why options are not exercised early if they go in the money. The answer is because you can make more money selling the option than exercising it. Here's an eXtreme example. You know that even OTM options have time premium. Well, suppose a call option you own is...