Anyone into Covered Put Writing? (Short the stock; Short a Put)
I love it.
4Q (my favorite stock for this strategy - QQQQ)
I love it.
4Q (my favorite stock for this strategy - QQQQ)
Covered Put Writing
- Thread starter exQQQQseme
- Start date
but if the stock goes up.
how does being short a put help?
The premium would drop and you still have stock out there that you borrowed.
how does being short a put help?
The premium would drop and you still have stock out there that you borrowed.
Noob and Dagnyt: Thank you both for very good and accurate replies.
1) Noob: If the stock goes up, the short put profits, but not as much as the short position on the stock looses. With QQQQ, if the stock goes up a dollar, I roll up the short puts.
2) Dagnyt: No question that you're right. Yes, this is a synthetic short Put. What I generally do for protection is to make a diagonal out of this by purchasing an out of the money call several months out. For example, if I am writing current month Puts at the money (Currently $31) my inclination would be to buy Jun $36C's. Not a hard and fast rule as to what Call I buy here.
There are other considerations here...mostly money management stuff. I'll elaborate if there is an interest.
4Q
1) Noob: If the stock goes up, the short put profits, but not as much as the short position on the stock looses. With QQQQ, if the stock goes up a dollar, I roll up the short puts.
2) Dagnyt: No question that you're right. Yes, this is a synthetic short Put. What I generally do for protection is to make a diagonal out of this by purchasing an out of the money call several months out. For example, if I am writing current month Puts at the money (Currently $31) my inclination would be to buy Jun $36C's. Not a hard and fast rule as to what Call I buy here.
There are other considerations here...mostly money management stuff. I'll elaborate if there is an interest.
4Q
Dagnyt, the elaboration would lie in the continuous adjustment modus operandi.
4Q
4Q
I agree with Mark. Writing either a Put or Call simply means Selling to Open. Besides, I hope this thread doesn't get bogged down in a semantics discussion.
4Q
4Q