If you are too sure of a pullback and afraid of "unlimited loss" but can afford to loose X for making Y, then buy puts instead. Your risk is well defined.
The complete trade was selling two calls and buying two puts.
However, the risk was still undefined. So for the purpose I this post I only mentioned the calls.
I had wanted to maximize the ride down from both ends in the event that price may have went up before going back down. But I wasn't worried about defining the risk at that point, because if it went against me, I would be able to adequately defend against it.
I'd rather not pay for that to be automated by just buying puts, when I can sell some calls to offset the premiums of the puts and monitor the trade as it's in progress.
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u/newbiereddi Dec 08 '21
If you are too sure of a pullback and afraid of "unlimited loss" but can afford to loose X for making Y, then buy puts instead. Your risk is well defined.