Adiggs - just so I understand, you'd be selling 3x as many calls (versus puts) at a lower share price and the opposite at a higher share price? I may be thinking about this backwards, but would assume one would want more puts at a lower price (forced to buy low) and more calls at a higher price (forced to sell high). Am I thinking about this right? This is a someday strategy for us - not nearly enough capital to do this at present so we have to stick with spreads.
I think you might be right - that I got things backwards in my message.
Whichever way I got it:
The idea is that at a higher share price I want to be getting assigned on calls, so that I sell shares for cash.
At a lower share price I want to be getting assigned on puts so that I buy shares for cash.
At higher share price I want more cash for selling puts than shares for selling calls. The idea is that what is most likely to happen is that the shares reverse and I'd like to have minimized my share holding for that drop. Similarly at a particularly low price I'd like to have more shares than cash to take advantage of that rise back up. Especially since regression is the most likelyl follow up to a particularly low share price.
That does raise an important difficulty. When we reach a particularly high or low share price, then I shift into the resource that if I'm right, will be the one that performs least well. The one that the share price is moving into. I.e. buying shares at low prices - now I'm selling covered calls into a rising share price as it moves back towards the middle, or even beyond to a relatively high share price.
Similarly at a relatively high share price I'll be turning shares into cash, and then selling puts into the down moves.
I manage that dynamic in a few ways.
- I'm aware of it and will account for it.
- That mostly means the side that I think is about to be under pressure - I'll be particularly conservative with those strikes. At least until the share price is more middling - then I'll get a bit more aggressive. The side that is taking assignment - I'll be more aggressive with at least some of the positions that I want to be assigned. I never want to be all puts or all calls, but at particular extremes I might get down to very few calls or puts.
- My standards for the income are particularly low. That is to say the results I need to achieve in order to meet my income target. I realized a couple of months back - taking on extra risk for extra earnings will just enable my wife and I to donate more to worthy causes during our life (we won't be taking it with us, or leaving it to somebody else). And that extra risk CAN put our retirement in danger or at least under pressure.
- All of the losses and mistakes was getting too aggressive on the wrong side. I.e. too aggressive on puts at an ATH; too aggressive on CC at near term lows (like the 760s I sold when the shares touched 750). If I'd sold 800s or more like 850s the premium would have been a lot smaller, but rolling them up and ahead of the share price wouldn't have been an issue. The latter is a better trade for me. Even though the series of trades that led me to the 760 at share priced 750s had been the pattern for 3 or 4 previous sales, all big wins.
I need a copy of the note
@Yoona keeps sticked to her monitor
)
I can pay my taxes + buy racing parts for my 3 
But noone took up the offer :/
