Strategy

[atticus]

The difference between a CC and a short put in a portfolio is simply that you can choose not to rollover on a portfolio of shares. The PNL of the two are identical (other than rate-sensitivity).

If you're long a share basket in your 401k then you sell the call.

 

[joneog]

Quote from MTE:

If you can sell 1 call then why do you find it harder to size 1 put?

Only time I've sold a CC is if I have a longterm position and want to hedge some and/or take advantage of a jump in vol, save some on comm and take the short-term cap gain on the hedge. I've done it with my longterm gold position with some success.

Otherwise, as has been said, why do two trades when you can do one?

It's funny when you listen to option "experts" on tv and they're more than happy to inititate CCs while excoriating naked positions. Guess its all about churn and commissions.

 

[Chuck Krug]

i wish i didn`t start this thread now, everyone is ganging up on me

maybe the reason is that i mostly sell covered calls or puts when the underlying is already at a profit and the strike is +- my target

nevermind

 

[Chuck Krug]

i try to keep winning positions as long as possible

 

[MTE]

Quote from Chuck Krug:

i wish i didn`t start this thread now, everyone is ganging up on me

maybe the reason is that i mostly sell covered calls or puts when the underlying is already at a profit and the strike is +- my target

nevermind

Well, that makes all the difference. Based on your initial posts it appeared that you made the two trades (underlying and option) simultaneously, but based on your last post you seem to be trading options at a later time once the underlying moves, in which case it is a reasonable thing to do, since you already have a position in the underlying.

 

[Chuck Krug]

i normally trade stocks
got the idea this morning
why don`t i do the same with futures
was a bit of an experiment to be frank

 

[Chuck Krug]

didnt mean to rile you all up

 

[Chuck Krug]

going now
see you all later

 

[Strangler]

It's funny when you listen to option "experts" on tv and they're more than happy to inititate CCs while excoriating naked positions. Guess its all about churn and commissions. [/B]

So true... Naked really gets a bad rap in the media. But anyone who is long regular stock is naked too!!

My favorite is on CNBC Options Action when they compare a proposed options trade to the same trade using regular stock. They'll say something like "you could initiate the same trade by shorting AAPL stock, but you may as well light your money on fire". Then they'll go on to recommend an options trade that is just as risky and 10 times more confusing...

 

[atticus]

Quote from Strangler:

So true... Naked really gets a bad rap in the media. But anyone who is long regular stock is naked too!!

My favorite is on CNBC Options Action when they compare a proposed options trade to the same trade using regular stock. They'll say something like "you could initiate the same trade by shorting AAPL stock, but you may as well light your money on fire". Then they'll go on to recommend an options trade that is just as risky and 10 times more confusing...

The lesser Najarian bro who's short a few chromosomes actually went on about some position, only to be asked why he didn't simply trade the natural. I am surprised that they aired it unedited. Or maybe the show is live, dunno.