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Strategies & Market Trends : The Covered Calls for Dummies Thread
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To: BDR who wrote (221)4/25/2001 2:39:16 AM
From: EnricoPalazzo   of 5205
 
The only time a put sale is covered is when the seller is also long a corresponding put with the same or higher strike, that is, a put spread (McMillan, p. 281). I can't help you much with spreads. I have never done them

I've done some more reading today, and the term for what I meant is apparently a "cash secured put" (i.e. what duf said). Write a 20 put, keep $2000 cash on hand.

It turns out that my proposed strategy (write a covered call and a cash secured put, both OTM) is a common strategy, called a straddle. Actually, I believe that straddles are typically done both ATM, but the philosophy is similar--collect premiums, and bet against volatility.

--Hopelessly confused
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