Newbie question.
What would happen if you sell 1 covered call at $520 and 1 cash secured put at $420 for jan17.
Just wait for the market to move materially in any one direction and buy back put if QQQ goes up or buy back call if QQQ goes down.
If the market stays in the range you can skim of the profits.
Posted by Erdango
5 Comments
Why would you buy back the one that moves to a lower risk level? I.e. if the underlying goes up in price, the risk of a now-even-farther-OTM short put being exercised goes down, so why would you buy it back?
Yes, if market stays between $420-520 at Jan 17 strike date, you’ll win profits from both sides. If either of the options price is $.05 ($5 for the contract of 100 shares) or less, I’d recommend closing it out. It’s up to you beyond that re whether you wanna repo call or repo put.
Thats wheeling. And its a good strategy for your long positions.
I’d look to do these at 30-45 days and close them out when they hit 50%.
[https://www.tastylive.com/news-insights/why-manage-at-50-not-25-for-short-strangles](https://www.tastylive.com/news-insights/why-manage-at-50-not-25-for-short-strangles)
Thats just a long dte covered strangle