any better way to do this

hypothetical example

say IWM (ETF) is at 62

I buy 100 shares and sell one call at 62

I sell one vertical spread on put side - sell at 62 and buy at 59.

I get two premiums to start with. Now what is the risk?

and any better way to get the same results? Is there a name to above strategy?

Thanks for feedback

 

Divide your net premium by 2

Break even is 62 minus the above number

For every pt IWM drops below breakeven, you lose 2 pts, down to 59

Below 59 you lose 1 pt per 1 pt drop


A covered call equals a naked put so same result achieved by selling two 62 puts and buying one 59 put

 

If I buy two puts at 59 I hope that will help further in reducing my risk. Thanks for your comments

 

If you buy two puts at 59 then you end up with a simple put vertical.

 

Not the feedback you're looking for but....forgive me for being really blunt:

You've been trading options for many years yet:

1) You still haven't managed to grasp the basic concepts of synthetics.

2) You still haven't learned to plot a risk profile.

You'll hate me for saying this but, isn't it time you gave up? Perhaps trade something easier for you to grasp other than options?

 

Honestly I am not offended by your comments. I know my lack of knowledge and I will add 3rd item as well. I donot know anything about greeks.

I want to move from options to daytrading index futures. I am spending lot of time on building screen time . If I can grasp price action daytrading the futures is the best way. I hope to be there someday.

 

Not everyone can be an expert like you.

He's not spamming, flaming, trolling. He's just asking basic questions and I assume he's trying to improve his understanding and ability. Give the poor guy a break, and the benefit of doubt.

 

Trust me, if he was a new poster or options newbie I wouldn't have replied as I did.

I'm no expert either and the benefit of the doubt has indeed been given many times before.

He humbly accepted my suggestion and he knows exactly why.

I respect him for not taking offence and starting a flame war.

I believe I tried to do him a favor by being honest about his prospects.

Don't take my word for it though. Ask him how many years he's been trying to trade options and how many years he's been on these forums yet he's not able to recognize long stock and short call as a synthetic short put.

I wish him luck with his pursuit of futures trading though. It's no biggy. Options are not for everyone.

 

ROFL. I made a lot of money trading long before I had a clue what synthetics were. It's not exactly a vital metric for successful trading.

 

The attached chart shows what you described is simply a naked put.