Wow! ALL OF THEM. The best trader in the world. Everyone follow him.
Buy / Write
- Thread starter viruscore1
- Start date
I don't know what the big deal is. Your return on 100 shares is:
0.93% if unchanged
1.72% if you capture the div and GPC recovers to your purchase price
2.56 % if assigned but don't capture the dividend
3.35% if dividend captured and assigned
On margin and Ignoring borrow cost, return is approximately double the above (that assumes that your entire account is fully margined).
0.93% if unchanged
1.72% if you capture the div and GPC recovers to your purchase price
2.56 % if assigned but don't capture the dividend
3.35% if dividend captured and assigned
On margin and Ignoring borrow cost, return is approximately double the above (that assumes that your entire account is fully margined).
I’m at Cheetah ponpano right now. It’s not a big deal, your right . I do this type of trade all the time but this time I did not enter my cycle to accumulate stock with otm short put. I usually make more ...
pano
Ok, i am back from cheetah's. I don't use margin often, although the return calculation is based on wise use of margin, just because it's there. The borrowing cost is minimal in my case, similar commision expense. It's the cost of doing business like anything else necessary to complete a transaction. Maybe different in your case though.
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I've been doing this for years to generate 5 income streams from 1 stock. Often I have completed my cycle in about 1 month.
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Just sell a naked put....half the commissions.
I'm long GPC to collect dividend. Actually, my norm is to short put close to the money for assignment, which is another income stream. GPC Nov options have already passed, the setup is for buy/write. Notice the call strike price is otm for capital gains when assigned. It may not be assigned leaving room for another short call: repeat until assigned. I may short put for next cycle.
However, annoying. The quantity i'm trading, commision is a minor expense, similar to taxes.
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I have often read about this strategy. Do you let yourself be assigned if the call is in ITM or the put? This is whats always sort of held me back in trying this out full tilt. I followed this strategy on a dutch tech stock called ASMI for a while last year. It made good money - less than an outright long position but then again the risk was lower.
It hurts when the stock takes off pass call strike and the gains are missed. But that is hindsight doing it's best work on your psyche, you can't lose money taking a profit. Occasionally, i do not sell call on my all my contracts. The key is multiple income streams.
Ok - but do you let things go to assignment or do you close and rollover?