I’ve got a couple experiments going on that are kind of interesting. They came out of long term positions where the weekly calls got run over. I booked the LEAP calls for gains and then rolled the run over weekly calls into bull put spreads and continued selling against them.
While doing this I’m beginning to wonder if that would be a reasonable way to play something long term without having to buy anything. (nothing out of pocket 🙂 🙂 )
For instance let’s look at WYNN. A stock that’s pulled back a lot with great weekly premium.
How about selling a Jan 2021 ITM 140/110 bull put spread for 18 bucks. 30 wide for 18 bucks so the max risk is 12 dollars. Sell weekly calls against the spread for the next two years only needing to cover the 12 dollars to have a risk off trade. What could happen long term?
1. Stock rallies then all good (assuming weeklies aren’t in trouble)
2. Stock tanks but you easily cover the risk with weekly sales.
3. A combination of both where selling just 50 cents a week makes 44 dollars profit at the end no matter where the ITM spread ends up.
I think I like these since they can be done without any cash outlay and the minimum required to cover the risk is considerably less (Jan 2021 LEAP calls are 25 dollars so over twice the risk of the ITM spread). Profit is “sort of” capped but that’s ok. The real money is in the weekly sales anyway.