Being short a straddle is "technically" unlimited risk, but no stock ever opened up at infinity, although some have opened at darn near zero.
Try to incorporate some technical analysis in your selections. Being short premium is in some ways only "good" as the stock. A successful covered write or short premium play is better than one with tons of premium.
You can also sell a "strangle" or a out-of-the money call and put, usually a 25 delta or less.
Bill
--- In ConservativeOptionS
>
> --- In ConservativeOptionS
> >
> > and the market goes up. how do I profit?
> >
> > or is it better to buy a call and a put ATM? How do I profit?
> >
> BUY 500 SHARES AT $9.00 ($4500)
> > SELL 5 CALLS AT .75 GET $375
> > SELL 5 PUTS AT .75 GET $375
> > IF AT EXPIRATION: STOCK OVER 9.00
> > STOCKS GET ASSIGNED AT 9.00
> > YOU GET 4500 FOR STOCK AND 750 FOR OPTION PREMIUMS
> > PROFIT 750 MINUS COMM.
> > ........
> > STOCK BELOW 9 AT EXPIRY
> > YOU STILL OWN 500 SHARES
> > YOU MUST BUY 500 MORE AT 9.00
> > YOU NOW OWN 1000 @9.00 PLUS KEEP 750 FOR PREMIUMS ON THE OPTIONS
> > ............
>
No comments:
Post a Comment