Writing Covered Puts

Discussion in 'Options' started by exQQQQseme, Nov 17, 2007.

  1. Shorting Stock and writing puts against it. What do you all think of the strategy?
  2. =NC
  3. +1
  4. I think it fits well when you have a downward bias with the stock. Especially when you dont think it will make a fast or big move.

    You can actually be 'wrong' and have the stock move a little bit against you (or not move at all ) and still make money.

    When your truly wrong and the stock goes against you then the short on the put acts like a hedge against your short of the stock which helps lower risk.

    Be sure to know your 'greeks' and be able to calculate what price makes sense to you. Option pricing can vary a lot depending on the time of day even when the stock is in the same price range.

    Best of trading to you

  5. segv


    I think that you are short a call.
  6. Unless you're doing something clever like legging in or trading individual legs, etc., you're just incurring more commissions and B/A slippage. 100 shares short and 1 put short is equiv. to a short call. Check out your synthetics again.
  7. Q12


    Sounds like a strategy a ML broker would try to talk his clients into using...

    "No No, it's much too dangerous to sell a put... lets buy the stock and sell calls instead!"
  8. exactly the same as a covered call, but backwards...

    I guess if you have a neutral or downward bias then you'll write covered puts. If you have a neutral or upward bias then you'll write covered calls..

    Easy Peasy

  9. The first two postings I received (page 1) said, "NC". Other than North Carolina, what do these letters stand for?

    Also, I know that this is synthetic naked call write. But I like this better because I don't have to worry about being assigned. Actually, assignment on a covered put write is great. This is expiration weekend and I have 5 that will be assigned. I love it.
  10. I like writing covered puts against my short book on big upticks in the VIX (implied vola = bigger premium).
    #10     Nov 18, 2007