A Friend wrote and asked this question- here is the conversation and response - NOT FINANCIAL ADVICE!! EDUCATIONAL ONLY!!
Yo Bro! Your thoughts on MU?(Bought 100 MU 406Sold 119.50 today) "There is another even more profitable strategy that pays double the CC - it called the covered strangle. You can safely play these on the edges of support and resistance - it is when you sell a CC and then sell a cash secured put - iF the stock rises above your call you get called away if it falls below your covered put you buy shares if it stays in between you collect double premiums. You wanna play these in slow grinding or ranging stock trends" - antwerks
Let’s look mu RIGHT?
a quick look and we have From the chart:
Current price ≈ 418.7
Expected move shown ≈ $49
Trend: Bullish but losing momentum
Volatility regime: Expansion but stabilizing
Gamma pressure: Neutral
That combination often leads to range consolidation after a strong run, which is exactly the environment where covered strangles work best.Your expected range roughly becomes:418 ± 49≈ 369 – 467So, the market is pricing a move roughly inside that band. ok hold on let me look at the option table.
Several signals support range probability: Trend losing momentum ADX flattening Volatility expansion already occurred big moves may slow Gamma environment neutral less dealer pinning pressure. All point to consolidation risk > breakout risk. ok options---
You sent
sell a 470 covered call for 8-8.50 maybe if you are lucky 9 and then sell a cash covered put 360 for ~6 bucks netting you around 14 for 9 days (from today) take a look- you can come in some on the put to 370-375 netting you 3 more bucks - now let's look at the outcomes
You sent
if it ranges in between, you keep the stock and the premiums - done...$$$$
You sent
If the stock jumps you get called away and sell the stock way up for profits and the put expires worthless and you keep the premiums. $$$$
You sent
If the stock drops to below put (wow that would be a drop) you buy the stock at 360 (or where ever you have chosen) if you bought stock at 418 to cover the call, then the cost average would be 360+418 /2 = 389 minus the 13-18 bucks premium so around ~374 or so, would you buy MU at 374 if so then no problem collect shares and do it again.
Yo Bro! Your thoughts on MU?(Bought 100 MU 406Sold 119.50 today) "There is another even more profitable strategy that pays double the CC - it called the covered strangle. You can safely play these on the edges of support and resistance - it is when you sell a CC and then sell a cash secured put - iF the stock rises above your call you get called away if it falls below your covered put you buy shares if it stays in between you collect double premiums. You wanna play these in slow grinding or ranging stock trends" - antwerks
Let’s look mu RIGHT?
a quick look and we have From the chart:
Current price ≈ 418.7
Expected move shown ≈ $49
Trend: Bullish but losing momentum
Volatility regime: Expansion but stabilizing
Gamma pressure: Neutral
That combination often leads to range consolidation after a strong run, which is exactly the environment where covered strangles work best.Your expected range roughly becomes:418 ± 49≈ 369 – 467So, the market is pricing a move roughly inside that band. ok hold on let me look at the option table.
You sent
one more chart observation that Favors This StrategySeveral signals support range probability: Trend losing momentum ADX flattening Volatility expansion already occurred big moves may slow Gamma environment neutral less dealer pinning pressure. All point to consolidation risk > breakout risk. ok options---
You sent
ok looking at it and this is not advice but something to look at and research and get your comfort zone adjustment -You sent
sell a 470 covered call for 8-8.50 maybe if you are lucky 9 and then sell a cash covered put 360 for ~6 bucks netting you around 14 for 9 days (from today) take a look- you can come in some on the put to 370-375 netting you 3 more bucks - now let's look at the outcomes
You sent
if it ranges in between, you keep the stock and the premiums - done...$$$$
You sent
If the stock jumps you get called away and sell the stock way up for profits and the put expires worthless and you keep the premiums. $$$$
You sent
If the stock drops to below put (wow that would be a drop) you buy the stock at 360 (or where ever you have chosen) if you bought stock at 418 to cover the call, then the cost average would be 360+418 /2 = 389 minus the 13-18 bucks premium so around ~374 or so, would you buy MU at 374 if so then no problem collect shares and do it again.
