You did...I'm just trying to get you to think outside the box a bit. Come Wednesday to Friday are there any cases where you would want to close/unwind your position?? I don't have the answers. Just letting you chew on it... I'm out of this thread... See you somewhere else...
I've owned XOM for 20 years. So don't want too much tax liability all at once. Thanks for making me think. PS I really am a math teacher.
lol has nothing to do with the bourgeois boat. I used to collect/trade high-end watches. My first big flip was an IWC il Destriero Scafusia that I bought in HK and sold a year later to a Saudi royal.
One more thing about selling call options. When you sell a call, you cap any upside to your stock to the strike price. If your stock runs up 20 or 30 points above your call option, those profits wind up with the call option buyer. Also, while time is an ally of the option seller like when you write a covered call, the longer the expiration say 3 months or 6 months or 1 year out (LEAPs) option, the advantage switches to the call option buyer as he has more time to be right and make monies. All these things need to be considered if you are considering taking any option position, be it as a seller or buyer of the option.
Thanks. I know about the cap on the upside. Had my SCCO assigned as gold/copper/iron ore went nuts in January. I like to sell covered calls. So far, I have done very well. Making money whereas before I would just be sitting and watching my portfolio go up and down.
Straddles is a directionless play that you buy it when you are not sure which direction the underlying is going or not interested in trading in any particular direction for the underlying but you know the underlying is going to move a lot either up or down i.e. with high volatility. Buying a straddle involves buying a call + selling a call so you make money when the underlying makes a huge move in either direction. Selling straddles is the opposite, you expect the underlying not to move at all in either direction so you sell a put+ sell a call, earning premiums from selling both ways. If the stock ever moves either way beyond the strike of either the call or the put more than the premium price then you suffer losses. If you have an idea of where the underlying is going, then straddle is not what you want or need to do like in your case you believe the stock is going up, it's best to invest or trade the underlying and then either buy a put to protect against any downside (what people call insurance and what I call the wingman for the stock). Or if you believe the stock is going down, you can short the stock and then buy a call in case if you get short-squeezed. Shorting a call for a bit of income while you hold the stock is fine but you just need to keep in mind that it will have very limited protection to the downside (only up to the premium that you sold the call for) if the stock starts to go down but at the same time caps the gain potential of the stock up to the strike of the call because once the stock price reaches or goes above the strike on the call that you sold, your call can be exercised against you and your shares would be sold. So it's not that good of an idea to sell a call on a stock that's very volatile i.e. moves a lot because when the stock goes up a lot, you lose all of the money that you could've made above the strike price on the call but when the stock goes down a lot, the premium that you sold the call for won't be enough to compensate for the loss that you might incur on the underlying.
There is so much wrong with this that I don’t know where to begin. Straddles need not be initially delta neutral, directionless. An example is a directional bet in skew (SDSV) which is a crowded trade. Buying a straddle is a combo; long call, long put. It does not involve “buying a call and selling a call.” MsDawn’s pony kicked her in the head, #infinitegamma