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I have started doing that as well this month with CSP But the disadvantage is the limited upside. If you just buy the stock, you could have unlimited profit if
by benibela 6y ago
I have started doing that as well this month with CSP
But the disadvantage is the limited upside. If you just buy the stock, you could have unlimited profit if the price goes to the moon, but the option only gives 1%. And you could still lose everything, if the price goes to zero
- xwdv 6y agoI wouldn’t advise CSPs over holding stock. Hold stock and sell covered calls. Only sell CSPS on down days below key support points in price. Back your CSPs using your margin power so your not tying up capital and have 100% equity investment in stocks, so you only go into margin if your CSP is assigned, and then you can just sell it off when the price recovers above cost basis, only costing you the interest of your margin loan amount per day. You could sell covered calls as well while it goes up to cover the margin interest payments.
- benibela 6y ago> I wouldn’t advise CSPs over holding stock. Hold stock and sell covered calls. I have heard CSP and CC have theoretically the same returns? Except for something called "skew". Although often I am too busy to trade for some several months, and then it would probably better to hav estocks. Do you do it on individual stocks or ETFs? Unfortunately I do not have a margin account. I could apply for one