Selling calls covered by other calls on the same expiration

Discussion in 'Options' started by DevGoneRogue, Sep 26, 2013.

  1. ABC is trading at $25

    The $30 call for Oct. 19th is $1
    The $35 call for Oct. 19th is $0.50

    If I buy 10 calls at $30 for $1 and sell 10 calls at $35 for $0.50 aren't I pretty much selling a covered call? Or are their risks to selling calls like this? I'm not looking for simple explanations here is there any chance that if I got assigned for my $35 calls that I wouldn't be able to cover them with my buys?
  2. Those are call verticals, your max risk is the premium paid. There is no more complicated explanation than this.
  3. In people's opinions what is better to run a vertical bull call or put spread?

    My own rookie analysis is that the put spread is better because there is a higher likelihood that you get the maximum profit of the spread, because if the stock goes even up a little above the lower ITM puts that you've purchased the odds that you get assigned the upper ITM puts that you've sold are pretty minimal (especially if the stock has never been above it's current price since those options were available for purchase).

    Conversely, a bull call spread requires the stock price to go at or above the upper call you've sold in order to obtain the maximum profit.

    Can someone break this down further?
  4. badata2d


    Might want to look at doing an Iron Condor, twice the return for the same margin. You are using the basic strategy you described, but doing it on the Put and Call side - same entity, same expiration. 4 trades total.