Pure semantics in my view. Here is a Warren Buffet quote - "When we own portions of outstanding businesses with outstanding managements, our favorite holding period is forever." This is as close to the ideal of "buy and hold" as exists is in my view and he chooses individual stocks for a specific reason in his chosen methodology. Every statement (including mine) has exceptions but general principles are useful to the trader. I respect what Don says and I respect what Sle says. Each of us could poke holes in the comments of the other on finer and finer technical points. In my view truth is relative and I don't think that serves the original questioner. Options are not about long term holding but risk management - mainly for the market makers and "buy and hold"ers. If you are willing to insure them, they will pay you for that service. Nater, did your questions get answered?
"Nater, did your questions get answered?" I'm afraid the OP's question got lost in the chatter. 1. The original question assumed he would get paid the ask on the call. This is almost never going to happen. If you got paid the bid you would have had a negative return... and there would have been no question. 2. The same trade has a negative return today...if you sell the call at the bid. At 10 minutes to close the $40 CC on BA yields -62 if you get paid the bid. You could wait to try to get the ask but the wait would probably be quite long. Also our glib assertion of the equivalence of the short put and the covered call does not hold strictly in the real market all the time. At 10 minutes to close a short Nov $40 put on BA had a positive yield of $37(at the bid). So there is a real difference in the real market of 62+37 = $99. These differences are common and can persist for quite a while. The major complaint against the OP's proposed strategy comes under the heading of 'picking up nickles in front of a steam roller'. It may be very unlikely that the call strike is violated but how unlikely is it? If it does happen how big is the cost? Does your stream of small wins prvide enough money to cover the loss? The estimates of how unlikely and the cost of being hit by the steam roller are key if you want to have a strategy that has a long term expectation of working. You must operate in a statistical envelope that has a positive expectation... including the possibility of a large loss should the 'black swann' land in your pond. It's a little like playing roulette. The Martingale strategy of playing red and doubling on each loss can seem quite a profitable game until you get that very unlikely stream of blacks and...get wiped out. But it is a fun way to lose $200 as I have often done.