A strategy often used is the. Our goal when in the out-of-the-money (OTM) call is to while simultaneously increasing our . Are there strategies that can mimic the covered call in an IRA account?
One substitute is a. This must be cash-secured in an IRA account, meaning the money is in the account to buy the stock at the strike price. It has a higher POP than a Covered Call. Another strategy is a . One variety of this strategy is even sometimes referred to as a . It’s formed by purchasing an in-the-money (ITM) call with an farther out in while selling an OTM call with fewer . The is much lower compared to strategies that buy stock or sell cash-secured puts.
Traders who are long less than 100 shares of stock can mimic the covered call strategy by selling a. This idea was a concept JJ Kinahan introduced in a segment of Closing the Gap. Another strategy that JJ discussed was the Covered Strangle, which is the combination of long stock and a short . This both increases the overall downside risk while taking in more premium for taking that risk.
Additional segments on using call spreads when you are long less than 100 shares:
Closing the Gap on January 19th, 2016:
Closing the Gap on April 11th, 2016:
For More on Covered Call alternatives see:
tasty Bites on January 26th, 2016:
Closing the Gap on March 1st, 2016:
Watch this segment of “Strategies For Your IRA” with Tom Sosnoff and Tony Battista for the important takeaways and a better understanding of the variations of Covered Calls.