How to use options to protect your stocks.
Buy 100 shares of nvidia at $104, simultaneously short sell a call option at $110 (around $8), then short sell a put option at $80 (around $3). If it drops to $80, I am happy to buy 100 shares to make up for the position. If it does not drop to $80, I will earn $300 in premium, plus $800 for the call option. If it rises above $110, then I will profit $600 from selling the $104 stocks, plus $300 and $800 in premium, totaling $1700.
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八字不合 : Can I ask if those sell puts or calls are automatically executed when they expire?
八字不合 : Also, I sometimes see that the price of the sell put is higher than the current price; how will it be executed? For example, now it's 68, but it sells a 70 put
丹尼斯0910 OP 八字不合 : Buy 100 shares at a price of 70 yuan
丹尼斯0910 OP 八字不合 : Where to sell a put ($70), the maturity is equal to the fact that you need to buy the stock at this price ($70)
丹尼斯0910 OP 八字不合 : If you like any stock, for example, you like NVDA, but you want to buy it at 90 yuan, then you can sell NVDA's 90 yuan put. If it falls below 90 yuan at maturity, then you get 90 yuan of shares, plus a few hundred yuan in royalties. If it expires above 90 yuan, then all of the rights money of a few hundred yuan belongs to you
八字不合 : So if you look at it this way, isn't it a steady profit, no compensation?
丹尼斯0910 OP : The win rate is quite high, but if it falls to 70 or 60, you also lose a lot. Your premium cannot cover that big loss because you bought it for 90 yuan
I Am 102927471 :
151770491 : What if it doesn't fall or rise?
丹尼斯0910 OP 151770491 : The expiration date, between 80-110, then you will be rewarded with 2 premium credits, 300+800
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