Hi everyone apologies if this is a basic question but I was wondering what the downside or risk of this trade is - 1) Long 100 shares of an ETF (e.g. TNA) 2) Long 100 shares of the equivalent short ETF (e.g. TZA) and then 3) write a call on the long index. If the call is exercised, i'd immediately buy the position in the long index back and write another call. The setup is meant to hedge out your risk on the underlying and then generate income. So far I have noted that the example indexes (TNA, TZA) don't exactly offset each other but I just want to test the theory. I'm pretty much a beginner at options and am looking for a simple way of generating decent, consistent income with low risk. Thanks in advance.
The ETF management fees would overwhelm your strategy. Keep it simple, don't go down the rabbit hole.
Looks like your Long 100 TNA and Long 100 TZA net each other out so you're just selling calls. Do it, do it.