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Podcast: Options Boot Camp
Episode: Options Bootcamp 51: Covered Strangles, Theta and Closing Spreads
Description: Basic Training: Covered Strangles/Covered Combo What is it? Long stock, covered call, short put. Why do it? Collect more income than a standard covered call or short put. Why not to do it? Increased margin requirement, you will increase your stock position to the downside. Example: XYZ trading at $50. Option 1 - Sell covered front month 55 strike call for $1 - collect 2% income. Option 2 - Sell both front month 55 call and 45 put for $1 each - collect $2 or 4% income. Rinse and repeat. Note: Call and put should only be sold on strikes where you are comfortable buying/selling the...