A covered call (ie. LongStock + ShortCall) can be turned into a Spread by opening also a LongPut with a different strike. Example: Before (ie. the CoveredCall): https://optioncreator.com/stdgpcw After (ie. the Spread): https://optioncreator.com/strc3jf As can be seen, the possible MaxLoss gets capped (cut) significantly: MaxLoss before: 72.67, after: just 3.55. But of course also the MaxWin gets capped: 32.32 to 6.44. Of course one should calculate the percentages out of the numbers to get the real answers.
Addendum: The strikes can also be identical. Then the end result is a constant number, ie. a straight horizontal PnL line. It's position depends on the premium one pays for the LongPut: of course the less one pays, the higher (ie. better) the PnL line becomes. Example: assuming one adds the LongPut after 10 days: both strikes 105, LongPut obtained for $29, ie. Put.IV lower than Call.IV: 132 vs 150: https://optioncreator.com/stdhnwl EndResult: +3.32 profit regardless of remaining DTE, spot, or IV . IMO funny . Of course in such a case one should try to close the position earlier if possible, because why wait longer when one can get the same result much earlier...
Yea no they can't because if you do you have just closed the position. Syn short put + long put at same price = nadda nil nothing no position.
NOPE! There are these order flags: Ie. you can very well have the same option with the same strike both as Long as well as Short at the same time (ie. as 2 different items in the account) by simply saying BUY_TO_OPEN (for Long) and SELL_TO_OPEN (for Shorting).