If I do a covered call and also short 100 shares with a stop loss at the breaken even price of my cc, would this be a guaranteed way of making premium profits without having to worry which way the stock will go during earnings? Is an early exercise of the cc the only possible flaw in this plan?
Will covered calls whilst shorting the same stock provide guaranteed premium profits?
byu/factsoverfeelings89 inoptions
Posted by factsoverfeelings89
3 Comments
A covered call involves you having 100 shares. If you sell 100 shares at the same time, you’re not shorting them you’re just selling to close your stock position and leaving yourself naked on the call.. which is a terrible idea for someone who doesn’t know exactly what they’re doing or doesn’t have the time to tightly manage the position
I’m having a really tough time following this so its either a strategy I’m not familiar with or there might be a mix up. There’s not really a guaranteed way to profit beyond the risk free rate.
Can you provide an example?
You’ll be screwed if the stock moons..