Howard, I call this a double barrel trade. You can be right twice, wrong twice or one and one. <g>
I do sell puts (long stock, short calls, which are synthetic short puts and hold cash) in my IRA income account, but I think it is a weak strategy most of the time. In general, if you like a stock enough to sell a put, then you should buy the stock or buy an in the money call. But that does not fulfill the needs of an income investor. Since IRAs and 401Ks have limited options for income investing, I think that short puts have a place in them.
Then buying the calls with the premie compounds your speculation. In general, I don't see a problem but you have to realize that you are nowhere near as low risk as a 90/10 speculator when you do this. And your base money, in Barrick, could get wacked. |
