So I've been experimenting with a delta-neutral passive income strategy. The idea is to buy the underlying, sell a deep in the money call, and buy OTM put (at the same strike).
I'm tracking this strategy's performance via Optionstrat. However, the results are too erratic/mixed.
I've tried to angle for a higher IV, theta, and vega for the short call but I still end up with occassional losses.
I'm a newbie so would appreciate comments from experts here. Specifically, what should I look for to optimize this strategy? Is it a fool's dream to try to eke out passive income in this manner? Thnx.
Can’t Figure Out This Passive Income Strategy
byu/rohel1 inoptions
Posted by rohel1
3 Comments
thats just a synthetic short stock position against your long real stock. the passive money would be the embedded interest carry rate the market makers would need plus their vig. you can save yourself a step and just buy tbills
I would said change the mindset of passive investing. The moments you are looking for passive income is the moment you give up ACTIVELY looking for opportunity. Only put on a trade when you think you have an edge.
You’re basically buying a put spread