Idea: use ShortSelling only

[Quanto]

Save yourself the confusion and buy a call spread.
Same R:R with 2 positions rather than 3.

The challenge is to do it in a CashAcct...
Only these are possible: LongStock, LongCall, LongPut, CoveredCall (= LongStock + ShortCall), CashSecuredPut (= ShortPut + Cash), and combinations of them like LongStraddle, LongStrangle, Collar etc....

Ie. for ShortSelling in a CashAcct one has to use CoveredCall or CashSecuredPut.
Of course can use also both at the same time.

 

[Quanto]

Does anybody know the formula for computing the combined BreakEvenPoint for 2 or more CoveredCalls with different strikes?
I have the formula for a single CoveredCall, but for multiple differing CCs a different formula is needed.

Btw, the CoveredCall is a substitute for a ShortPut, ie. it can also be called synthetic for ShortPut, or vice-versa.

 

[wxytrader]

LongPut as an additional leg to CC changes the PnL chart, ie. behaves differently than you describe.
Anyway, it's futile to continue discussing about LongPut since the topic of this discussion is to get rid of it.

P/L chart is useless for figuring out P/L for the wheel strategy. My spreadsheets calculations are saying if you ran the wheel with 1 contract on NVDA last year you would have averaged $1466.90 per month without put protection. This is including all assignments, fees and realized losses.

 

[Quanto]

P/L chart is useless for figuring out P/L for the wheel strategy. My spreadsheets calculations are saying if you ran the wheel with 1 contract on NVDA last year you would have averaged $1466.90 per month without put protection. This is including all assignments, fees and realized losses.

Sounds good, but how much own capital did it require for the said avg monthly result?

 

[wxytrader]

Sounds good, but how much own capital did it require for the said avg monthly result?

From my brokers website:

U.S Listed Equity and ETF Securities
Margin Requirement
Options eligible securities ($5.00+)
30%

So during the year running the wheel this would be the cash requirement based on the lowest and highest strikes you were assigned:

Minimum cash: $15,200*30%=$4,560
Maximum cash: $49,100*30%=$14,730

I guess that's regular T...

 

[Quanto]

From my brokers website:

U.S Listed Equity and ETF Securities
Margin Requirement
Options eligible securities ($5.00+)
30%

So during the year running the wheel this would be the cash requirement based on the lowest and highest strikes you were assigned:

Minimum cash: $15,200*30%=$4,560
Maximum cash: $49,100*30%=$14,730

I guess that's regular T...

Thx, seems to be a good result, indeed.
I hadn't time yet to code the Wheel Strategy for my test environment, but it's on my TODO list.

 

[eleanorK80]

Interesting strategy to manage risks in options trading. Have you considered how this approach might affect your overall portfolio risk in different market conditions?

 

[Quanto]

Interesting strategy to manage risks in options trading. Have you considered how this approach might affect your overall portfolio risk in different market conditions?

Not yet, but maybe soon
Why do you ask? Do you have a suspicion?

 

[BMK]

@Quanto

Why are you writing the names of the various strategies you are discussing without spaces in between the words?

ShortCall

LongPut

ShortSelling

CoveredCall

WTF, Dude.

That's not normal writing in any English-speaking country.

Do you think these phrases somehow acquire some sort of magic power, or a different meaning, when you run them all together like that?

Or do you just think it's somehow cool?

It's not cool. it's weird.

Are you using some sort of software, or computer code, or a book, or a website, that expresses the terms that way?

You're not writing code, man. Just speak/write normal English. What you are doing looks ridiculous.

 

[Quanto]

@Quanto

Why are you writing the names of the various strategies you are discussing without spaces in between the words?

ShortCall

LongPut

ShortSelling

CoveredCall

WTF, Dude.

That's not normal writing in any English-speaking country.

Do you think these phrases somehow acquire some sort of magic power, or a different meaning, when you run them all together like that?

Or do you just think it's somehow cool?

It's not cool. it's weird.

Are you using some sort of software, or computer code, or a book, or a website, that expresses the terms that way?

You're not writing code, man. Just speak/write normal English. What you are doing looks ridiculous.

Man, you bring a really stoopid argument into the discussion.
SingleWord makes more sense in this context.
I take the liberty.
Just eat or die, doesn't matter for me