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LOL. Were you on the yahoo option BBs circa 2007 when it was a circus full of a monkey ???

Owning the stock protects the broker not the investor who bears all of the downside risk. Unlimited losses? Have you seen any stocks go to infinity lately?

If one buys the stock for $100 and has a target sale price of $110 then selling the $110 covered call provides some premium while waiting for the sale order to execute. You're being paid for waiting. If the stock drops, you're also ahead of the guy who was just long the stock. If you're...

Theory and option greek mumbo jumbo? LOL. People tend to sell OTM covered calls (see OP's question) The position is delta long It earns money when the stock moves higher It loses money when the stock moves lower These are not the characteristics of a neutral position.

Net delta of CC is positive so it is a bullish position. Perhaps less so than outright stock but still bullish.

Maybe this involved Viagra eye drops? (makes it look bigger : )

All of this is a trade off decision. ITM options cost more and risk more to the downside but participate in the upside sooner (higher probability of a smaller profit). OTM options cost less and minimizes the potential loss (compared to ITM), offer the potential for a big profit but with a...

The best way to lock in a gain on an appreciated CC position depends on what the underlying (XYZ) does, going forward. Yeh I know, kind of a Captain Obvious statement. What "might" be best depends on several factors. How far OTM was the short call initially? How far now? How much has XYZ...

It's not the amount of premium remaining in a covered call. It's a question of whether the bid trades below parity, or not. Do you understand what I explained in the BBY example?

If you are not assigned early then you get the dividend.

Saltynuts, It's a conversion not a collar. Yes, he will make 22 cents on the it. He doesn't pay to finance the transaction. He gives up the interest earned on the cash in order to take the position. He's not likely to get the dividend if the call is ITM just before ex-div due to discount...

You're short the $90 call. Assignment occurs if MSFT > $90 at expiration. That means that the $90 put will be worthless. How will you close the put for a profit? Let's look at an example just before ex-div with expiration imminent. Take a look at BBY. Ex-div is tomorrow for 45 cents...

Unless you included commissions, conversion price is off. Regardless, if MSFT is ITM at ex-div, you are not likely to get the dividend --> early assignment.

How long the option has until expiration has nothing to do with a wash sale. Booking a loss does not create a wash sale. Buying "substantially identical" securities within 30 days (before or after) booking a loss creates a wash sale. The same holds true for shorting except that it's STO then...

I would have gone with something more recognizable such as Robert Redford in "Three Legs of a Condor"

As I said, "Rising IV will offset *SOME* of the decay and price movement *MAY* make the combo profitable even before the EA." If that rising IV only offsets *SOME* of the decay then the two long option prices will obviously decline. Who suggested that there's an edge in this? The underlying...

Long straddles and strangles for an EA are really problematic because you are buying two legs that are going to collapse when IV contracts plus you're going to lose on the other leg when price moves in the opposite direction. That's an awful lot of lost premium to overcome and requires a...

If you monitor IV, the general pattern is that it increases more dramatically in the two days before the EA. A small amount peak the day before. Some peak by early afternoon. Some peak in the last hour. Since I was looking for a specific ratio of near week IV to far week IV, once it got...

It's the short options you have to worry about not the long ones.

I used to trade a lot of earnings announcements. In general, I found that the highest IV was earlier in the day before the EA. What I looked for was a set up where the back week options had not inflated as sharply as the front week and I diagonalized the IC. Sometimes I even ratioed it as...