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The characteristic of many spreads is that P/L doesn't change very much for small to medium underlying price moves. I usually have to wait until close to expiration before seeing significant P/L amounts. Obviously if the trade is going against you this slow P/L could be a good thing...

The ITM call will likely drop in value when the stock goes ex-div. How much it drops depends on a lot of factors (how DITM, etc). In most cases, if you hold a significantly ITM call you lose money upon ex-div. OTOH, If you exercise the call prior to ex-div, upon ex-div the stock will also...

Go with IB. Thanks to some posts by Spindr0 a couple of years ago I changed over from OE and it's been very good for me. I still have my IRA with OE mostly because I like their tools and I have some spreadsheets tailored to them. Also OE doesn't allow margin cash or, for IRA's, cash...

Nitro, Not to belabor, but I didn't ask any question. Don

Nitro, If selling puts is bad advice, then buying puts has to be good advice. So, in effect, you are advising buying puts under the same conditions (no how, no what, no time frame, no why). Don

Look at it this way, it's a lot harder to make 15% trading Options than trading stocks. Think about this, options are a zero sum game. That is, for every option winner there is a loser holding the other side of the trade. So you could say 50% of the options players lose. On the other hand...

Why not? It's probably the best place for a beginner to start. As you likely realize a short NP is the equivalent of a covered call and I think that's safer than outright stock ownership. The only caveats I would give is do not use leverage; i.e, have the cash to buy the stock if assigned...

Don't forget about the alternative of selling a naked Put. It's probably not as exciting or as potentially profitable as the other ideas, but it's probability of success is likely higher (depending on strike choice). Don

With most brokers that I know the client still gets the interest. One notable exception is that in an IRA some brokers screw you on the interest on cash secured puts. About 18 months ago I learned that OptionsXpress reduces the interest on such cash to just under 2%. At the time my emails to...

Thanks for the interesting data, but I have a few questions. 1) What is a 30% incentive fee? 2) What does CTA mean? 3) How does a $1 premium system give $250 premium? BTW, in addition to the P/L shown any related cash would earn interest (about 5% recent years). Thanks again, Don

re:"The March would reasonably lose 1/6th of their backwardization which is 23.20 now which would be 3.86 or $386 gain. So best I can figure the DITM 1700 Sep-Mar Put Calendar would gain 386-180 =$206." I think that you are assuming that the amount below par for the March contract is totally...

re:"If the SPX goes up to the strike the DITM Put Cal will indeed make a good profit ". Agree. Actually profit starts at roughly 1500. re"But you are saying the backwardization(BKW) will get bigger at expiration if the SPX stays where it is." No, I think BKW gets smaller for both...

Because the SPX is a European style option the DITM contracts are subject to backwardation (check Google). Backwardation causes DITM Puts to trade below par and therefore time decay results in an increase in price. The problem with your calendar spread is that time decay causes the Sept...

Okay, I'll take a stab. Mind you this is just a guess. Multiply the dividend amount by the probability of closing at or below the strike. You can probably use delta as an approximation of that probability. The put value should be higher by that amount. This sounds right to me but it's...

If bid price suggests that the call holder can make more money by exercising rather than selling the call you will be at risk for assignment. Otherwise assignment is rare. Likewise if the ask price suggests slippage it might make sense to re-buy the stock rather then buy back the short call...

I think that you are confusing a cash secured Put with a covered Put. As I recall, a covered Put is a combination of short put and short stock. If my recollection is correct a covered put certainly has a higher risk than a CC. Don

Actually Rosy may have a point. That is, in order to price options correctly you need to know future volatility. Given that is impossible, by definition options pricing has to be wrong. Although I guess you can say that the value of most anything is just the collective opinion of the...

I believe IB opens at 12 noon on Sunday. http://www.interactivebrokers.com/en/software/systemStatus.php

An example of favorable tax treatment would be Long Term Capital Gains. LT Cap Gains get taxed at a lower rate then short term gains. Depending on how deep ITM a covered call is the holding period to achieve LT status might be affected. Another example of favorable tax treatment are...

If your transactions don't straddle tax years and you don't have LT Cap Gains then you might consider just reporting each transaction individually. That is, all options and stocks would be reported with their own P/L without regard to them actually being covered calls, etc. By treating each...