... for a 442.57 debit.
Comments: Buying stock and selling the -75 call against to emulate the delta of a 25 delta short put with the ability to defend the position immediately on test of the short call or the break even.
Metrics:
Buying Power Effect/Break Even/Cost Basis: 442.57
Max Profit: 6.43 ($643)
ROC at Max: 1.45%
ROC at 50% Max: .73%
Will generally look to take profit at 50% max/roll the short call down on short call or break even test. Will look to ladder out in longer duration at intervals.
Comments: Buying stock and selling the -75 call against to emulate the delta of a 25 delta short put with the ability to defend the position immediately on test of the short call or the break even.
Metrics:
Buying Power Effect/Break Even/Cost Basis: 442.57
Max Profit: 6.43 ($643)
ROC at Max: 1.45%
ROC at 50% Max: .73%
Will generally look to take profit at 50% max/roll the short call down on short call or break even test. Will look to ladder out in longer duration at intervals.
Note
I can see one immediate drawback of doing things this way ... . ITM options seem to get more illiquid the deeper ITM they are. I may tire of that over out-of-the-money, cash-secured short puts, but we'll see. Lack of liquidity is generally not your friend ... . There are also small, additional fees to put up with by being in the stock. Depending on what your broker charges for the privilege, this might also be a slight drag on the sexiness of doing things this way relative to just being patient with short puts, taking assignment, and selling call against at that point (which are almost always out-of-the-money calls).Trade closed: target reached
Opened for a 442.57 debit; closed today for a 446.16 credit. 3.59 ($359) profit.
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Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.