How a Covered Strangle Options Strategy Can Greatly Enhance Your Return - Cabot Wealth Network

Comments

  • John M.

    Andrew,
    In your article on Apple Strangle example you published on 7/28/22. Is their anyway that the 100 shares you purchased for $152.95 for a total of $15,295.00 can be taken away from you? Or are you only responsible for buying shares if they go lower than the $135.00 short put?
    Thanks,
    John M.

    • Andy C.

      Thanks for the question. They can be taken away from you if the stock pushes above your short call strike at expiration. As for buying shares, yes, if you allow the stock to close, at expiration, below your short put strike, you will be issued shares at the 135 strike. I hope this helps.

    • Andy C.

      Not nearly as risky as you would think, especially if you are using stocks that don’t have high-betas. Through selling calls and puts you are lowering the cost basis on your overall position and if you want to add more shares to your position, you are able to buy shares at a discount (your chosen put strike) to where the stock is currently trading, while still lowering the cost basis on the overall position. I hope this helps.

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