I am figuring worse case 2.00 gain, goes way back up 4.50 gain, and in between maybe can move the put up for next month.
About the poor strategy, in this case is it better to write calendar calls? (e.g. buy Jan11 & sell front-month?) Is this provide a better Risk/Reward ratio? (I wonder if I'll do it on Yahoo...) Paul
In a vacuum, it might be... if all you were looking at was risk/reward. You have to select the strategies that line up with your outlook for the underlying. Then you have to select the one whose risk/reward spectrum best fits your profit objective and loss tolerance. A calendar tends to be a neutral strategy (unless placed OTM) whereas a CC is neutral to mildly bullish. In that regard, they're somehwat similar. However, the downside is totally different so comparing them is sorta apples and oranges (see their P&L graphs).
i didn't see if it was mentioned, but might want to try a diagonal play, substituting a ITM long call for the stock. Substitute with a call around .8 delta.