Sell Put—Buy Call
If you sold the put for $2.50 ($2,500) and bought the call for 25*2 ($250), you would have a net in of $2,250. Now, as the stock increases, you can either buy back the put or just let it expire (in most cases). The call could now be sold for $1.50 or $1.75, generating more income.
|
Stock Price |
Put Price ($15.00) |
Call Price ($15.00) |
|
$13.00 |
$2.50 |
$0.25 |
|
13.50 |
1.75 |
.50 |
|
14.00 |
1.25 |
1.00 |
|
14.50 |
0.50 |
1.25 |
|
14.75 |
0.25 |
1.50 |
|
15.50 |
0.125 |
1.75 |
You get rich (cash flow rich) by selling— get better at getting out than at getting in.
If you have to get in, do so at wholesale prices. If you have to get out, do so at retail prices.
