What do you mean? I'm talking about selling both a put and a call on a stock where both the put and the call are "in the money" to the buyer. I gave the example in my post above. What is that called? Too many posts on this forum are tied up to vernaculars and what not. "Sell deep in money calls and puts on the same stock at the same time" is what I mean to get some premium but risk little absent a major, major meltdown in the underling.
What's the least risky options writing strategy?
- Thread starter nwoptions
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What do you mean? I'm talking about selling both a put and a call on a stock where both the put and the call are "in the money" to the buyer. I gave the example in my post above. What is that called? Too many posts on this forum are tied up to vernaculars and what not. "Sell deep in money calls and puts on the same stock at the same time" is what I mean to get some premium but risk little absent a major, major meltdown in the underling.
Stock at 20 sell 15 call & sell 25 put is the same payoff as sell 25 call and 15 put.
Wait, WAT? If you sell at 25 call on a 20 stock, you are going to collect a VERY SMALL premium. Same thing if you sell at 15 put on a 20 stock. That is COMPLETELY DIFFERENT than what I described, and offers VERY LITTLE downside protection, which is WHAT THE OP WAS LOOKING FOR....
Some of you people amaze me... and not for good reasons lol....
Lol ok lets say stock finishes at 20 at expiry you call is $5 in the money your put is $5 in the money what are you left with from your original premium - $0.40.
Sell the strangle sell $25 call get $0.20 premium sell the $15 put get $0.20 premium stock finishes at $20 you get $0.40 profit. Holy shit that is the same as your strategy.
Graph it up in your trading platform if you won't take my word for it.
Lol ok lets say stock finishes at 20 at expiry you call is $5 in the money your put is $5 in the money what are you left with from your original premium - $0.40.
Sell the strangle sell $25 call get $0.20 premium sell the $15 put get $0.20 premium stock finishes at $20 you get $0.40 profit. Holy shit that is the same as your strategy.
Graph it up in your trading platform if you won't take my word for it.
Are you for REAL? Doing what you are doing the 20 cent premium on both sides is the same, but you don't have the ability to absorb a ****more than 50% swing in either direction*** without loss! This really is a very simple thing to understand... I just gotta say, this is kind of weird man, I literally have spelled it out to you a few times now...
Tell me this what is your profit/loss if stock finishes at say $30 that's a 50% swing up.
Thats not a straddle,its the guts of a short box..Its the risk equivalant of shorting Strangles,not straddles....
Any more questions????
Any more questions????
Here ya go. This is the $10-wide inverted strangle that you're recommending. That is, you're getting into a trade that is worth -$10 * 100, or $1000 negative right from the start - and getting paid less than that for it.
As an example, NLOK is about $20 right now; the 15C mid is 4.70 and the 25P is 4.75 (I doubt you can get that much for them, but let's say you do.) So, you'll be getting paid $9.45 - a guaranteed loss of 0.55/share in the best case. But if the price moves against you, you'll be losing anything from $15.55/share (if the stock goes to zero) to infinity if it goes all the way up.
I'm not sure why, but something about this trade makes it less than appealing...
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