Can you sell calls and puts at the same time?

A covered straddle is an options strategy involving a short straddle (selling a call and put in the same strike) while owning the underlying asset. Similar to a covered call, the covered straddle is intended by investors who believe the underlying price will not move very much before expiration.

What happens if you sell a call and a put?

A covered straddle position is created by buying (or owning) stock and selling both an at-the-money call and an at-the-money put. The call and put have the same strike price and same expiration date. The position profits if the underlying stock trades above the break-even point, but profit potential is limited.

What happens when a put option goes below the strike price?

If an investor owns shares of a stock and owns a put option, the option is exercised when the stock price falls below the strike price. Instead of exercising an option that’s profitable, an investor can sell the option contract back to the market and pocket the gain.

What is it called when you sell a put and sell a call?

Short straddles involve selling a call and put with the same strike price. For example, sell a 100 Call and sell a 100 Put. Short strangles, however, involve selling a call with a higher strike price and selling a put with a lower strike price. For example, sell a 105 Call and sell a 95 Put.

Can you sell a call option after it hits the strike price?

When the strike price is reached, your contract is essentially worthless on the expiration date (since you can purchase the shares on the open market for that price). With the market tumbling, you can choose not to exercise your option but instead sell it to capture whatever premium remains.

Is selling put options Safe?

If you sell a put right before earnings, you’ll collect a high premium, but put yourself at risk of a big loss if the company misses and the stock declines. If you sell a put right after earnings, the stock decline has likely already happened and the premium you receive will be lower.

Can you lose money selling calls?

The maximum loss on a covered call strategy is limited to what the investor’s stock purchase price minus the premium received for selling the call option. For example, let’s say you are long 100 shares of stock in company TUV at a price of $10. You would lose $1,000 on your long stock position.