Covered Call Question

Quote from oldtime:

A long call would be ok in a steep decline, but a slow extended period of stagnation or decline would kill me. BY the time the ul makes its move up who knows how many long call prmiums that expired OTM I would have to overcome.
More...

Did you consider selling an OTM leaps Put? Good premium, enough price space, and time on your side. I would NOT sell at the bid, but maybe at the ask minus 0.01, if not at the ask.
 
Quote from hajimow:

The best strategy in your situation is selling the underlying (stock) and then do a risk reversal trade (Sell out of the money PUT and buy out of the money Call) for a credit or even. Lets say the stock si at 100. Sell the stock and buy 102.5 Call for the Sept and sell 97.5 PUT. You can engineer the position for lower risk like if the stock goes up, buy a 95 PUT to limit or.......
More...
HUH?
 
Quote from hajimow:

The best strategy in your situation is selling the underlying (stock) and then do a risk reversal trade (Sell out of the money PUT and buy out of the money Call) for a credit or even. Lets say the stock si at 100. Sell the stock and buy 102.5 Call for the Sept and sell 97.5 PUT. You can engineer the position for lower risk like if the stock goes up, buy a 95 PUT to limit or.......
More...

lol 97.50 and 102.50 options. Not a lot of 2.50 wide strikes at the price. Even so, why are you recommending the 97.5/102.5 put spread?
 
well, thanks for all the replies. I've been thinking it over. I have to give up something. So I'm willing to give up the fantastic profits on a big move up in exchange for protection from the fantastic losses on a big move down.

So that means making money in the middle, and that involves selling premium. And most likely legging in.

bout everytime I think I got it figured out I see something I have missed
 
Quote from oldtime:

well, thanks for all the replies. I've been thinking it over. I have to give up something. So I'm willing to give up the fantastic profits on a big move up in exchange for protection from the fantastic losses on a big move down.

So that means making money in the middle, and that involves selling premium. And most likely legging in.

bout everytime I think I got it figured out I see something I have missed
More...

:) Great conclusion! No free money, just a different risk profile.
 
You must log in or register to reply here.
Back
Top