If you are talking about a simultaneous buy/write compared to selling a naked put,...corrrect me if I'm wrong but the differences are: A simultaneous buy/wright is harder to get filled than a naked put, as that fill must be done by the specialist by hand, and the stock price and desired premium need to match up before a fill can take place. You can close the covered call early for a profit, if the stock has a decent drop. And then hopefully initiate another covered call if/when the stock rises again. Thus, if it was a long enough contract, you may be able to initiate 2 calls, in the same unit of time of the original contract. You can close the naked put early for a profit, if the stock has a decent rise. And then, use the freed up cash to sell a 2nd naked put, perhaps in the same "unit of time" as the original contract. If you use more cash than you have for the buy/write strategy, you will be charged margin interest daily. If you use more cash than you have to sell naked puts, there is no margin interest charged to your account..... unless an excessive number of puts get put to you. When selling a naked put, the order for the premium you want gets placed in the form of a "credit". When initiating a buy/write for the same desired strike and premium as the naked put seller received, the order for the desired premium is placed in the form of a "debit". Thus, if the naked put seller earned a $0.50 credit on a $15 strike, the buy/write "debit" order would be placed as a $14.50 "debit. That being, the desired credit amount is subtrated from the desired strike. Thus, $15 - 0.50 = a debit of $14.50 When placing a premium order for a naked put, the order frequently must be placed in increments of $0.05. Not pennies. When placing a premium order for a buy/write, the order can always be placed in increments of a penny. Again, all this refers to doing a simultaneous buy/write, where the trade order does not get initiated, unless the specialist matches up your order for a buy of the stock and a sell of the call together. Hence the reason they are more difficult to get filled than selling a naked put.... even for the same strike, same potential dollar earned, and same length of contract. Buying a stock and selling a subsequent covered call at a later date, is a totally different iissue and discussion. . I do buy/writes occasionally. But I prefer the "simplicity", and easier time getting a naked put order filled vs the buy/write. Not to mention, not getting charged for margin interest unless an excessive number of puts are put to me. On the other hand, buy/writes tend to keep investors from over leveraging. So there are positives and negatives for both strategies. BTW, I like your ideas about keeping things simple.
Hope to sell a $25 put on CNX this week, if/when CNX tests $30. Just waiting for the credit I desire. My main concern with the company is it's level of debt. It's borderline excessive. The "interest coverage" of it's debt is acceptable,... but I generally want more than merely "acceptable". These debt type issues are not generally a concern for the option trader. But since I'm going in naked (unhedged), there is always the possibility of owning the company long for a period of time. Thus, "recovery potential" is something I like to consider BEFORE I initiate any trade.... as excessive debt can stall a stocks recovery. While the CNX debt exposure is not excessive. It's also not much better than merely acceptable. On the other hand, given that my BE price for CNX would be under $25,... my chances for recovery from a sig drop, would be very high. And I'm please to say, the stock would also pay a dividend of slightly over 2 % based on my price of ownership.
I like the idea of you always double printing my multiple paragraphs. It gives readers twice the opportunity to review them. Besides, they are all short paragraps. Thus much easier to read than those really long ones. But on the downside,.... because I keep the paragraphs short, there are more of them.
Seriously considering selling a $40 or 41 JOY put for Oct. Just waiting for JOY to test the $50 area before initiating the trade. Need the stock to trade $50, give or take a little, to get the credit I desire, for the annualized % return I desire. Possibly tomorrow?
I don't have a thread running, but bot the AAPL weekly 60/70/80 fly from 2.63 risk (2.54 mid) so not a great fill.
660/670/680? AAPL will more than likely be past $680 this week, maybe even hit $700. Run up to earnings in October.