In and out with the big jump on Wednesday

At 9:51 EDT Wednesday I was setup for a couple days with my purchase at  of SPY at 106.73, long S104  3-Sept puts at .23 and short S107 3-Sept calls at 0.80  for a breakeven of  106.16 and a max profit of  0.84. Twenty minutes later I closed out SPY at 108.11, S104 puts at .08, and bought back my calls at 1.62 for a …

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SPY covered call with protective puts

The biggest downside of covered calls is their lack of downside protection on the underlying.   A big, but not unusually big correction can wipe out many months worth of profits.   One strategy for reducing this exposure is to buy puts, but when I have looked into this strategy in the past the puts were either so expensive they ate up all the profits, …

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