Those are either / or propositions. The buy-write is specifically a buy the shares and sell the calls operation. The profit dynamics and management dynamics - all of the other dynamics, at least for me, I work as if its a cash secured put.
Alternative can sell the cash secured put.
For myself I'm finding that I like the buy-write dynamics better than the csp. I think its because on a share drop followed by a share gain, the initial drop will realize a large gain on the buy-write and a large loss on the csp. On the share gain you get the reverse - the share gain and close in the buy-write will show a large realized loss that offsets the initial realized gain (leaving the net credits as realized profit).
With the CSP the same sequence shows a large realized loss on the initial move and then a large realized gain on the second move, with the 2 netting out and leaving the net credit.
I like the buy-write better because I find it trivial to hold those to close (I've gotten early closes for .05 or .10 -- I don't like holding and allowing to expire, over a positive close). With the csp I'm more likely to take an early close at a high % gain, especially in this down then up situation, that might net out to $0 or even a small loss, just to be sure I don't get bitten on another down move. Maybe its mostly psychological for me, but one of my learnings over the last couple of years is to recognize how emotions creep into my decision making and don't fight them. It might be a good reason to not trade (I take this angle in some situations) and it might be a reason to pick one trade strategy over another as it is here.
All that being said I'm not doing buy-writes in my taxable account any longer. I do have a current leap cc that I'm working using the same buy-write logic. I went really, really DITM for a 1-2 month call with share like behavior. I found the Sept 100 strike (300 pre-split, shares around 900) with <$1 time value, delta of ~1, theta of ~0. I am more than willing to roll that long call month to month as my share replacements - 24 months of these rolls will get me a total time cost that is lower than the time value in a 2 year option.
The key underlying dynamic that makes a buy-write work is that the shares are delta 1 / time decay 0 / no time limit backing to the cc. At -all- price levels the shares are gaining value faster than the cc is losing value on a move up. WIth closer to the money long calls, especially when you add in vega, this is not the case. Especially if those long calls are more like an .85 delta - the short calls can easily go over .85 delta if they're ITM and approaching expiration. At that point the long calls are gaining in value more slowly than the short calls are losing value - that's bad and requires a lot more detailed management to avoid that.
The really, really DITM long calls on a 1-2 month horizon is something I'm still experimenting with. I can imagine coming up to a .99 or even .98 delta - I suspect that .95 delta is just too close. The reason is that on a significant drop in the share price, that delta on the long call will be falling to lower and lower levels. The short calls will be realizing gains, but are unlikely to realize gains as fast as the leaps are accumulating unrealized losses. Losses that will be realized pretty quickly when using 1-2 month long calls.
Thus deeply enough ITM that the long calls retain their share like behavior, even in the face of a big drop.
