The only way to achieve such a position (there are a number of spreads that may fit the bill) is to leg into it, which requires market timing skills and it is definitely not risk free, well that is until you complete the spread.
A Coverd Call is synthetically a Naked Put. Buying a protective Put, creates a Bull Vertical spread. A Collar is synthetically a Bull Vertical. (you just invest more) Reverse Collar = Bear Vertical Verticals would make less money than Naked Puts, but have catastrophic protection built in. It is easier to make decisions when you understand the Risks. Carl Enjoy life! It's limited, you only get as much as you take.
Thanks I want to protect myself for downside. If I buy one ETF for 119 , I immediately sell call at 119. I am happy to do that because if my stock is called away I will buy another 100 of some ETF and carry on. It is the downside for which I am worried. ETFs are more stable than other volatile shares.
I sold the vertical put on SVNT today after it already fell hard on no sale of the company but with FDA approval of its drug. That is a very safe option. However, since I do believe the stock will rise in value, I also bought calls and even the stock itself. I am looking to sell covered calls after the stock rises and let myself hopefully get called out of the position at a profit.
A while back I Paper Traded three legs of a Box. I chose IWM because of it's small slow movements. I found it difficult to track Profit/Loss while trading. It is a good exercise to follow the P/L of the trade. There is only one answer, although the calculating procedure will very the results. Carl
check out radio active trading, they also do free webinars were they review using puts for protection, kurt has some stuff on youtube. poweropt has free stuff also. coveredcalls dot com also has a free letter on cc and for ten bucks a month their paid site is pretty good. avasaram is also a free site for cc analysis.
RadioActiveTrading amuses me. They act like buying stock and buying DITM puts is a guarantee of profits. Yes, it does reduce the percentage risk of each position, but they don't mention much about how you now need the stock to rise dramatically to make any money (by expiration at least). Also, doing that is basically the same as buying a Call and putting the rest of the money away. For example: XYZ at $80 6 month out 100 strike put on XYZ is $30 Buy 100 XYZ - Buy the put - Total cost = $11000 Max risk = $1000 since the put + stock will be worth at least $10K However, the stock buyer immediately makes money if XYZ moves up - the stock+DITM put buyer won't make at the same rate. At expiration, XYZ must be $110 or more for profits - that can require a pretty serious move just to make small money. If the stock drops, you "only" lose $1000 - however those $1000s can add up over time. I know they have other strategies and ways to "get income", etc. as well, but everything with options is give and take. My problem with them is they make the buy stock+DITM put out like they discovered it and it's the greatest strategy in the world! JJacksET4
I'm not sure what you mean by safer but I'll say that properly structured option trades are definitely safer than owing long or short stock. The main advantage (for me) of options is you know *absolutely* what your max loss is. A stock trader can't *really* say that with certainty. Well, except for a long stock holder, whose max loss is if the stock goes to 0$.
I'm assuming you are talking about an options spread which limits your max loss and your max gain. Combining a stock with an option or an option spread can accomplish a similar result.