And by the way, what is a "covered" straddle, in the short straddle sense? If I buy 100 shares, and sell a call, that is a covered call, no? Then if I sell short 100 shares and sell a put that is a covered put, no? Well, combine the 100 long and 100 short, and you are back to NO NET SHARES. Just like my original proposal. BOOM you just got taken back to school, JUST LIKE THAT...
I might just do that Overnight. But I want to open a new account so I can easily see how its doing over time without having to back out my other gains and what not. But it is very much on my radar. The question is is it better to do this with indexes or single stocks. I would think single stocks. In other words, I'd think there would be more overall profit to sell 200 contracts on 100 different stock (half calls, half puts) then 200 contracts on the SandP 500, for example. But any thoughts on that? Thanks!
I'm just saying if you have a small probability of complete ruin...it's not a good strategy....if you use your account valve as a stop that's another story....but forced liquidation by your broker isn't a good exit strategy lol
ok I am going to Reply just because my brain hurts from stupidity. Say you have stock at 100 you sell ATM call for 5 and ATM put for 5 - say you do it in 2 accounts so that in one you are also short the stock (covered put) and in the other you are long the stock (covered call) stock goes to 200 on M&A. the stock you are long you give UP at 105 leaving you naked for -95 points on the short side. You get + 5 credit from the put your net loss is -90
You are a future billionaire.May be you can start a trading room fo $299 per month to teach your great idea.
I have to study this more thoroughly, but it seems you are literally saying go open two separate accounts (!) and in one go long the stock and in the other short the stock? Even if you go through that process (!) doesn't the price movement in the two positions exactly offset one another (!), so you are better off just not going long/short the stock in the first place? Be nice, please.... Thank you in advance.
But doesn't any strategy have a non zero possibility (you said "probability", but you used the word "small", generally inconsistent with "probability", so I will go with the correct word, possibility) of complete ruin? Buying the S&P 500 - could go to zero tomorrow - complete ruin! The better question is whether it is a smart position to take, taking into account reward potential, risk potential, etc.
So you close at possibly huge loss? I have been playing around with selling covered straddles (most commonly referred to covered call plus short put). I find that this strategy is only “worth” doing on high volatility stocks which can really hurt you. So back to playing it small for premium selling.