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.

While slightly different, this is a popular cycle that involves alternating between selling puts and calls. buy put sell call strategy

at a specific strike price (typically At-the-Money). Sell a Put at the same strike price and expiration date. : If the stock drops and you are

: 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) The Wheel Sell Put (then) Sell Call Income

: You sell a put on a stock you'd like to own at a discount. You collect a premium while you wait.

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)