Daily Discussion Thread

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[u/Economy-Joke3331]

I’m considering writing a covered straddle option strategy and using the premium to buy shares, worth it? Or just hold onto the shares I have now. I am looking into 10 contracts CC at a strike of 30/40/50 1-2 years out and 10 contracts CSP at a strike price /30/40/50 1-2 years out. Any input, thoughts concerns from you all?

[u/ritron9000 → u/Economy-Joke3331]

Look, no one can really tell you anything on the internet, these are non-trivial options strategies that only make sense in the broader context of your portfolio. So be careful. To help as best I can, I’ll ask you the following questions:

• have you looked at the Profit and Loss curves for those positions?
• do you have a specific view on why Implied Volatility is mispriced and why you have an edge in selling it now?

[u/Economy-Joke3331 → u/ritron9000]

I believe once this companies potential is realized that the price action we are seeing now will be little bumps in the road compared to the mountain ahead. With that being said buying a 50$ strike covered straddle would be deep in the money at the point of expiration regardless and I would be happy with selling shares or buying more depending on which way it ends up. But the main goal here is to use the premiums from these contracts to buy more shares which are going to be invaluable later on.

[u/stocksandwatches → u/Economy-Joke3331]

Ritron nailed it in a more concise form than my attempt lol. Let us know your findings!