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To: Vision

Yes, writing a put is basically like getting paid to have a buy limit order on a stock. On your call question, I think you mean when you buy a stock and write a call at the same time, you could be hoping that someone exercises immediately to lock in a profit, but they may not until closer to expiration because they can sell with a time premium until it gets close to expiration.


13 posted on 02/02/2019 3:16:13 PM PST by aynrandfreak (Being a Democrat means never having to say you're sorry)
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To: aynrandfreak
No. Here's an example in my imagination not taking commissions into account.

ABC is trading at $100.50 and trending upward. Instead of buying it via a stock trade I sell an in the money put for $100 (for $3), which automatically executes and my basis is $97.5. Six months from now I want to sell the stock at $110. I sell an in the money call (for $2) and automatically gain two extra points.

19 posted on 02/02/2019 3:26:12 PM PST by Vision (Obama corrupted, sought to weaken and fundamentally change America; he didn't plan on being stopped)
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