Shorting can be the appropriate strategy; nothing wrong with it per se . I mean, those covered call trades you love are synthetically equivalent to short puts, so...
But shorting the Qs during earnings for a rocket like NVDA, and having no protection against a big price move - yeah, that's not something with much longevity. Typical "tree munfs ago I coludn't spell 'tradooor' and now I are one" behavior.
Not that I mind; when I look for stupid money to trade against, these types provide it.
Dude, you forced me to respond...
Yes, they are similar...But they are not the same.
I hate having to defend the covered call...But I'll have a go and see how it differs from this person's trade.
The only thing similar is they are both one legged. With my covered calls, I can buy back at almost any time (and take my losses or gain).
His trade was on margin and one legged...Speaks for it self.
I already own QQQ and am just holding it. But, if I bought another 100 shares and wanted to option it, I would do this and we can look at the potential income flow...
I buy 100 shares...Then do a covered call $5. out of the money for say 3 months, or a leap (12-14 months).
There is rich premium for the call. I will earn the premium and any dividend that is declared...If it gets called away, I earn the $500. A few years ago premium and dividends didn't matter much. But with money markets earning about 5%, the compounding does make a difference. When you add the compounding on top of the compounding, it makes for interesting cash flow. When you put this into a Roth IRA, it get even more interesting...
So yes, very similar...But different maneuvers and mechanisms that can (and will) create different results.
