You are referring to a specialized case of cc writing called buy-write. Imo this is primarily a trading technique that is unrelated to ltb&h. There is a world of difference between buy-write and the periodic sale of cc's against long term holdings.
That is not necessarily true. I am assuming that the seller of the puts/writer of the calls wants to increase his/her position. For example, if I wish to establish a long NTAP position, but I am unwilling to pay more than 20, I can sell puts at 20 and collect the premium rather than simply sitting on my cash waiting for NTAP to dip.
You're overlooking the fact that writing puts requires the use of margin, and which means the technique can't be employed in sheltered accounts. Following that thought, a badly managed short put position could result in a margin call. Writing cc's against core positions does not require assuming such a risk.
You're overlooking the fact that I can provide the necessary collateral by holding enough cash in my account to buy the shares should I be assigned, without using margin. This can be done because the maximum potential loss is known before establishing the position. ROI is still increased as long as the put is OTM.
If you haven't established long term core positions and don't have a need for income, I'm not sure I'd recommend it. For younger folks who are still adding to cash to their portfolios and have long investment windows, it may not be the right approach.
Actually, that is precisely the case in which I would recommend it. Selling puts can be a controlled method of buying (pick your price, collect your premium to lower your effective buying price, and wait), just as CCs can be a controlled method of selling (pick your price, collect your premium to increase your effective selling price, and wait).
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