Buy Put Sell Call Strategy File
This strategy is used by traders who do not own the stock but want to mimic its performance with very little capital. :
: You want exposure to a stock's movement but prefer to keep your cash liquid or use significantly less margin than a traditional stock purchase. 3. The "Wheel" Strategy (The "Income" Strategy) buy put sell call strategy
: If the stock drops and you are forced to buy it, you then sell a call (covered call) against those new shares to continue earning income until the stock is eventually "called away" at a profit. Comparison Summary Components Primary Goal Risk/Reward Profile Protective Collar Long Stock + Buy Put + Sell Call Hedging Limited downside, limited upside. Synthetic Long Buy Call + Sell Put Leverage Unlimited upside, significant downside. The Wheel Sell Put (then) Sell Call Income Collect premiums at every stage. This strategy is used by traders who do
at a specific strike price (typically At-the-Money). Sell a Put at the same strike price and expiration date. The "Wheel" Strategy (The "Income" Strategy) : If
: Collects a premium that helps pay for the put.
: You have significant gains in a stock and want to protect them through a period of high uncertainty (like an earnings report) without selling your shares. 2. Synthetic Long Stock (The "Leverage" Strategy)
