For those Wheelers out there….
It occurs to me, selling a covered ITM Call and a CSP at the same price is essentially the same trade. So, when doing the wheel, rather than having your ITM calls assigned and opening up a new wheel with a CSP, couldn't you simply roll the ITM call at the same price and achieve the same fundamental result?
Transaction fees would be the main difference, I'd think?
Edit – Added covered clsrification to the ITM call.
Posted by RadarDataL8R
2 Comments
A covered call has the same risk/reward as a CSP. An ITM call by itself is a different trade. You can roll puts or calls. If it’s worth it depends on how much credit you receive, how much capital you’re tying up, how far out in time you’re rolling, etc.
When you roll, you buy to close and if your call is ITM it’ll be expensive. You will either get low net credit or even some debit.
If you let it get assigned and then sell puts it’s a pure credit, you just collect more premiums.
Of course with that you also get the risk associated with holding the stock, even if temporarily.