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Strategies & Market Trends : Option Strategies
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Thehammer
To: Hank Scorpio who wrote (2247)2/25/2021 12:22:42 PM
From: THornsby1 Recommendation  Read Replies (1) of 2591
 
In the mid 80's, I wrote covered calls until I transitioned to selling OTM puts which are equivalent to same series/strike covered calls. The crash of 87 taught me how fast you can be forced to own lot of stocks. For me, it does matter if I am assigned or not because the intrinsic loss can be significant. That painful lessons served me well in the 2000 Internet Bubble and flipped over to gains in 2008-2009.

A secondary complication in a hard correction is that implied volatility skyrockets so buying to close short options becomes dicier. That 87 experience wised me up to risk management.

While I don't do many of them anymore, OTM iron condors also double the premium (in the sense of naked strangles) except that the premium is lower. They're usually not viable for near term weekly options or if the B/A spreads are wide.

My most frequently used go to hedged strategy is something I picked up on another BB a few years ago. The gist of it involves ownership of a stock that I like that pays a decent dividend (3-4 month position). It has the upside potential of a covered call and the put protection can often provide 20-25% of downside protection (sometimes a modest premium credit despite the drop). It's more viable when IV is higher so last year it was great... and useless for low IV stocks. I loosely delta neutral adjust as the underlying moves in order to book gains and/or sell more hedged premium to soften losses. Losses occur. How you manage them is a large part of how you fare. It's very different from what you do (we all have to find our comfort zone).

It's good to see some option posts crop up. Hopefully others will share their ideas.
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