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re: Can you sell calls to establish a short position?
Posted on 7/11/16 at 3:27 pm to dabigfella
Posted on 7/11/16 at 3:27 pm to dabigfella
What about selling the call at or just out of the money and buying a call for a later expiration that is farther out of the money?
Limits risk (makes it not a naked call) and the loss of value of the later expiration call is at a slower rate. Net gain if market is flat is profit from sold call less time value loss in purchased call. Loss on the upside and downside are both limited.
Is that a decent strategy for a sideways market?
Limits risk (makes it not a naked call) and the loss of value of the later expiration call is at a slower rate. Net gain if market is flat is profit from sold call less time value loss in purchased call. Loss on the upside and downside are both limited.
Is that a decent strategy for a sideways market?
1
Posted on 7/11/16 at 3:37 pm to kjacksonp
Calendar bull call credit spread. I think that is what this would be called.
I mentioned this earlier, not a calendar spread, but just a credit spread. That would certainly give him a maximum loss certain, and wouldn't drive his yield down that much. He could sell monthly or weekly calls against the other call in your calendar spread.
But frankly for the 5 contracts of the mini, which SPY essentially is, he should have just bought 5 puts for $500ish, and been done with it.
I mentioned this earlier, not a calendar spread, but just a credit spread. That would certainly give him a maximum loss certain, and wouldn't drive his yield down that much. He could sell monthly or weekly calls against the other call in your calendar spread.
But frankly for the 5 contracts of the mini, which SPY essentially is, he should have just bought 5 puts for $500ish, and been done with it.
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