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/biz/ - Business & Finance

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29062613 No.29062613 [Reply] [Original]

Hi /biz/ options noobie here and I'm wondering if I'm being retarded or if this is a legit strategy. Say I sell a cash covered put on a stock at a strike of $4 and I collect a $10 dollar premium, now my option gets excercised and I pay $400 for the underlying stock, I then sell a covered call at a very low strike price, say $1 and I collect a $320 premium. Now my covered call gets executed and I sell my shares for $100, am I not a net gain of $30? Almost 10%, is this legit or am I being retarded? What's the downside of this?

>> No.29062872

>>29062613
What does this have to do with shitcoins?

>> No.29064108

>>29062872
Isn't this place called business and finance? Not /shitcoin/

>> No.29064207

>>29064108
>>29062613
if something seems to make you money with no risk it's definitely not going to work

>> No.29064788

>>29064207
I mean there's a risk involved that I can see (for example the stock tanks and calls get super cheap before you can sell one), but it seems pretty tame. You also cap off your profits, so if the stock booms you see none of that, but the risk/return seems way off, unless I'm being a complete imbecile.