May 26 2022, 02:03 PM
QUOTE(Lon3Rang3r00 @ May 26 2022, 09:55 AM)
Higher Premium? It's a bear market now...
Given the scenario as below.
Assumed my average acquisition price for Company ABC is $100 for 100 shares. Currently the stock is trading at $80.
Instead of earning Premium out of the money, I choose to sell Covered Call at $80 strike price and the stock got called away at the end of the week.
The following week, I start to sell Cash Covered Puts with the strike price of $80 or below and wait the stock to get assigned back to me.
By doing the above (Selling Covered Calls and Cash Covered Puts using the same Strike price) and IF everything went smoothly, It nett off since the stock got called away and reassign back to me at the same strike price, and i keep the high Premiums that from both sales options.
And IF i did not get assigned back after the Covered Calls, then the maximum loss will be ($2000 - the premium i got for both sell options), but i still can continue to sell Cash Covered Puts in hope to get assign back.
Unless you really hurting for liquidity, else no need to sell at a loss.Given the scenario as below.
Assumed my average acquisition price for Company ABC is $100 for 100 shares. Currently the stock is trading at $80.
Instead of earning Premium out of the money, I choose to sell Covered Call at $80 strike price and the stock got called away at the end of the week.
The following week, I start to sell Cash Covered Puts with the strike price of $80 or below and wait the stock to get assigned back to me.
By doing the above (Selling Covered Calls and Cash Covered Puts using the same Strike price) and IF everything went smoothly, It nett off since the stock got called away and reassign back to me at the same strike price, and i keep the high Premiums that from both sales options.
And IF i did not get assigned back after the Covered Calls, then the maximum loss will be ($2000 - the premium i got for both sell options), but i still can continue to sell Cash Covered Puts in hope to get assign back.
If I were you and liquidity is not an issue, to reduce the avg cost of ABC:
I will sell put at say $60 at $0.5 premium and sell call at say $85 at say $0.3 premium.
If both goes thru and expired worthless, I cut down my avg cost of ABC to $99.2
This is provided you have fund to cover for the sell Put. Slowly grind till you recover your loss.
It is painful and slow to do this. I am also doing this to recover. That's why we need to be mindful on our entry price.
This post has been edited by Toku: May 26 2022, 02:10 PM
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