Covered Strangle Strategy — Advanced Income on Holdings
Covered strangle: own shares + sell OTM call + sell OTM put. Double premium vs covered call alone. Cash-secure the put. Best on stocks you want to accumulate.
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ORIGINAL POST
Covered Strangle Strategy — Advanced Income on Holdings
If you own 100 shares and want more income than covered calls alone, sell a covered strangle: sell an OTM call AND an OTM put simultaneously. You get double the premium. The put is cash-secured by your willingness to buy more shares at a lower price. Works best on stocks you want to accumulate. Risk: you can get assigned on the put in a crash AND lose value on shares. Size conservatively.
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