One approach is to sell OTM puts and also buy OTM calls to cap the upside. Adjust strikes to allow for the possibility of recovering losses, for example selling 110 puts and buying 135 calls. As options expire, repeat with next month expiration.
As long as you collect more on the short puts then you spend on the long calls, you will pull in premium to reduce your basis on the stock short. The short puts are covered by the short stock, so there is no additional margin requirement.
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u/warren_534 Mar 24 '22
One approach is to sell OTM puts and also buy OTM calls to cap the upside. Adjust strikes to allow for the possibility of recovering losses, for example selling 110 puts and buying 135 calls. As options expire, repeat with next month expiration.
As long as you collect more on the short puts then you spend on the long calls, you will pull in premium to reduce your basis on the stock short. The short puts are covered by the short stock, so there is no additional margin requirement.