[TheOptionClub.com] Re: Is my thinking correct?

 

Gis

Your current position of a covered call at the 29 strike is the equivalent of being short the 29 strike put.

If you sell the stock and sell the 37 strike put, your adjusted position becomes short the 29 call / 37 put [a 'Guts' strangle].

If you want to be short the 29/37 strangle then it would be much easier to simply sell the 37 call.

Your adjusted position is then long stock / short the 29 call / short the 37 call; which is the equivalent of being short the 29/37 strangle.

Is it worth it ... only you can decide that?

Cheers
James

--- In OptionClub@yahoogroups.com, Meuter Gisbert <gismeu@...> wrote:
>
> Hi,
>
> I entered a paper trade with UWM
> Bought a covered call when it was at 30
> short April 29 call and long stock.
> Now it is around 33.90 and I want to sell the stock and sell an April 37
> put.
> The reason is that I get a little extra money or profits, since the put has
> still some time value left
> and my forecast is sideways to down towards April expiration.
> I increase my risk a bit obviously, but my question is
>
> am I overlooking something here by exchanging stock with a short put
> or do I really get some extra money? (provided at expiration UWM
> is between 29 and 37)
>
> thanks, gis
>

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