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Zecco.com » General Investing » Options Trading » selling puts/writing calls
Last post 08-06-2007, 4:39 PM by rondogaci. 1 replies.
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  •  08-06-2007, 4:21 PM 9730

    selling puts/writing calls

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    Does anyone have experience with or thoughts about repeatedly shorting puts and, if assigned, writing calls? I understand you'd have to be okay owning the underlying, so maybe use this approach with the Dow stocks as a group to reduce risk. As long as you waited for the underlying to hit the right price when you had to write the calls (so that you didn't lock in a loss if assigned), could this strategy generate 12-15% a year? I realize this approach is way dull compared to high octane options trading, but I can't monitor positions during the day, so trading is not realistic for me. Is this a well-known use of options? Any suggestions about similar (apparently dull!) uses of options?

  •  08-06-2007, 4:39 PM 9732 in reply to 9730

    Re: selling puts/writing calls

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    Indeed, it is a well-known strategy in options trading.  However, you typically leave the underlying issue out of it (exercise is rare because closing a position is typically more profitable for both parties).  There are many web sources of information on option spreads and stradles.  Here's one I like in particular... http://www.investopedia.com/university/optionspreadstrategies/
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