aggresive covered call trading

Discussion in 'Options' started by osho67, Jan 12, 2012.

  1. MTE

    MTE

    Or you can just buy a 75 call and sell a 77 call, and achieve exactly the same thing.

    On a side note, you can also sell a 77 put and buy a 75 put to, once again, achieve exactly the same thing.
     
    #21     Jan 13, 2012
  2. Thanks. But will my premium income be the same?
     
    #22     Jan 13, 2012

  3. Oh gotcha. Sometimes online it's hard to tell ones motive haha and on ET of course. But I mean I personally don't use covered calls a ton. I do on occasion but everyone prefers different strategies which work for them. I prefer vertical spreads though, but that's just me different things work for different people
     
    #23     Jan 13, 2012
  4. Yes and no. I mean I agree like I said previously i prefer to do verticals but the OP seems to be comfortable with the covered call play. But yes though you'd have to pay the premium instead of receive you risk much less than you would by doing a covered call strategy.

    In my first response I was only trying to stay as close to OP's strategy as I could.
     
    #24     Jan 13, 2012
  5. MTE

    MTE

    The risk is exactly the same in all 3 combinations (call vertical, put vertical or stock collar).

    Also, whether you pay or receive premium (as is the case in a short put vertical) is completely irrelevant since you would also have a margin requirement, which would reduce your buying power as well.
     
    #25     Jan 13, 2012
  6. MTE

    MTE

    All 3 positions have exactly the same risk/reward ratio. The reason being that there are synthetic equivalents of each other.

    That is, buying the stock and selling 77 call is synthetically equivalent to selling 77 put. Likewise, buying the stock and 75 put is synthetically equivalent to buying 75 call...
     
    #26     Jan 13, 2012