Protective put covered call. Subject 1. Covered Call Strategy and Protective Put Strategy. Quiz 11 Print Mark as complete Bookmark this LOS Add my private note.

Protective put covered call

Options 101: Adding Put Options to Covered Calls

Protective put covered call. Two common strategies are to reduce exposure by using a covered call (selling a call option) or to use a protective put (buying a put option).

Protective put covered call


The biggest downside of covered calls is their lack of downside protection on the underlying. A big, but not unusually big correction can wipe out many months worth of profits.

I have found that the best way to really appreciate the strengths and weaknesses of a strategy is to have money at stake, so I started to look for a good situation to do some hedging on a covered call position. Some downside protection seemed like a good idea, and the OTM puts were attractively priced at 0.

Maximum profit on this trade was 0. The market dropped off sharply on the 10th. In cases like this I will often buy back the calls. In this case I bought back the Aug calls at. Wednesday the market really blew off. Friday I closed out the position early because I was not going to be able to monitor the position the rest of the day, selling the SPY at Related Posts In and out with the big jump on Wednesday. I disagree with your opening statement that covered calls suffer from a lack of downside protection.

It all depends on what strike you choose. For example, right now you can buy GE at Factor in the dividend that goes ex-div Sep 16 and you have an annualized return if called and if flat of Hi Mike, Very good point. ITM calls can provide lots of downside protection. However I am wondering about your What am I missing? You can probably get a couple more cents premium by beating the spread with a combo order, but that's still quite a ways from Covered Calls Coach audio conference calling.

Sweet Webseite, hatte ich nicht in Ihrem Blog in meinen Recherchen kommen! SPY covered call with protective puts Updated: Thursday I sold Aug calls at 0. All content on this site is provided for informational and entertainment purposes only, and is not intended for trading purposes or advice. This site is not liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein.

It is not intended as advice to buy or sell any securities. I am not a registered investment adviser. Please do your own homework and accept full responsibility for any investment decisions you make.


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