--- In ConservativeOptionS
>
> All,
> A question for the group. Does anyone in the group who uses covered calls ever collar the call with a protective put? My impression is that not too many people do.
>
> Michael
> www.safe-options-
>
mike i have a strategy that i usually have one open position.
what i do is sell a naked put around 90 days out with the put atm
ex. may put on IWM IWM is 60.58 sell the 60 put at 3.15
then i buy a protective put itm farthest one out
ex. jan 12 - 70 put for 15.16 with time value of only 5.58 for two years of protection that is a 9.3% max risk not factoring in 4% dividends over 2 years which brings it down to 5.3%
if i don't get assigned on the short put i repeat it
if i get assigned i sell covered calls 90 days out with strike at cost basis
over the next year i adjust the long protective put based on the changes of the underlying
dr joe
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