Are there advantages to selling calls at several strike prices?

Take it easy everybody!
If you care to know what I did (in terms of XOM) ...
Today I sold 5 x 123C with a March 10 expiration date.
XOM 03/10/2023 123.00 C
I'm still holding the 5 put contracts expiring this Friday
XOM 02/03/2023 111.00 P

When JP farts tomorrow maybe the markets go down, take XOM with it, and I sell my PUTS. (And make some money)

I will eventually learn more options strategies, nomenclature, etc. But for now I'm doing the best that I can, to do what I think is best.

What books should I read?
 
Cabin111 said:
If you did not FULLY understand what you just did, you may not have made the correct trade. Not saying you didn't. But not fully understanding, could create problems in the future. Hand holding buy your broker (if they allow it) may be needed at this time...
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You were right in that I did not FULLY understand what the hell I did.
Thank you for helping me think about it.
 
MathTeacher said:
Take it easy everybody!
If you care to know what I did (in terms of XOM) ...
Today I sold 5 x 123C with a March 10 expiration date.
XOM 03/10/2023 123.00 C
I'm still holding the 5 put contracts expiring this Friday
XOM 02/03/2023 111.00 P

When JP farts tomorrow maybe the markets go down, take XOM with it, and I sell my PUTS. (And make some money)

I will eventually learn more options strategies, nomenclature, etc. But for now I'm doing the best that I can, to do what I think is best.

What books should I read?
More...


@newwurldmn and I are friends.

Long stock x long puts x short calls: You are long the diagonalized synthetic call spread. In reality the 111s are going to go off worthless and you'll end up with the March CC.
 
Cabin111 said:
I've written covered calls for about 25 years. Other people are much smarter than me on these threads. Until you fully understand what you are doing, you would be wise to just stick with the covered calls and puts, to buy back near ITM.

Read and learn...Very slowly and with small amounts...You don't want to blow up an account!!

And yes, I have done options (at different prices and the same expiration date), for XOM...It does work. If I were you, I would go from (example $130. in $5.s down to $110.). My wife is always harping on me about losing (getting quality called away) options. I will then need to buy the stock back after 31 days (if I wish...Per IRS rules).

Just last week I owned 200 share of Schwab (SCHW). I had one covered call at $90. Jan 23 and the other was at $72. Jan 23. One got called away, while I am holding the other one. I'll just wait on the one that didn't get called away...See where it leads.

One last thought...XOM at $120. for Mar, Apr, Jun, July, and Jan 24. Do 5 different dates...Continue to collect option money and dividends...
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destriero said:
Yes. You are long 5 x 111C.
It takes a while to sink in. I understand why owning a stock and buying a put for the same stock makes it become a call at the put strike price! Duh, once the stock goes below the strike price you are losing money on your shares and gaining equivalent on your put. They cancel each other out. So, you really just own a (synthetic) call at the put strike price (as far as profitability goes). I guess owning shares and owning a call in the money are equivalent also.
Got any books I should read?
Now if you short say 5 x 125C at 0.4 you've reduced the price of that synthetic 111 call by 40 cents. The result is that you would be long a 5-lot 111/125 call spread (via the synthetic). You have no upside risk, but your terminal gains are capped at 125. No different than had you bought the 111/125 call spread outright.

There is no difference (practically) between a "natural" position and the synthetic.

It's useful to understand synthetics so you can confidently add optionality.
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destriero said:
@newwurldmn and I are friends.

Long stock x long puts x short calls: You are long the diagonalized synthetic call spread. In reality the 111s are going to go off worthless and you'll end up with the March CC.
More...
Good that newwurldmn is a friend, at least I understood the acronym WTF.
Today is Tuesday. Fed decision tomorrow. Powell speaks tomorrow. How do you know that my put will go off worthless?
 
destriero said:
Your quote has (mine) and MsDawn's text commingled. Our DNA cannot touch...

Anyway, I have only read Hull in the space but I hear good things about Natenberg; also Baird's Option Market Making.
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What quote?
I noticed your affinity for TheDawn. I'll try to never commingle.
 
MathTeacher said:
Good that newwurldmn is a friend, at least I understood the acronym WTF.
Today is Tuesday. Fed decision tomorrow. Powell speaks tomorrow. How do you know that my put will go off worthless?
More...


You need 3-4% for the put to go ITM and the co had a solid beat and closed on the high. I would think the SPX would have to drop 3% to touch 111 and we have tech reporting later in the week (AAPL, GOOGL, AMZN). Reaction to Fed should be 1-1.5%. Any reaction >2% on Fed should be faded.
 
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