WDIS: Back to Cool

Delta Neutral Covered Calls

WDIS: Back to Cool

Options involve risk and are not suitable for all investors. Please read Characteristics and Risks of Standardized Options before deciding to invest in options.

Despite the fact that /CL has hindered Katie and Tony's portfolio this year, the duo decides that it's important to still have a (smaller) hand in Oil with USO. With a High IV Rank and a very inexpensive stock, USO looks to be a prime candidate to get long. However, since they have been burned in the past, Tony thinks it's a better idea to put on a trade that is delta neutral. By trading a Covered Call and shorting 4 Calls with ~25 delta each, this trade is directionally neutral on entry. Katie wonders why not just short 2 of the ATM Calls instead of 4 Calls, and Tony explains that shorting Calls further out allows your stock to make more money before the Calls are worth anything.

Rounding out the segment, Tony quickly explains a possible skewed Iron Condor in TLT, which has a high IV rank and is near a price extreme in recent days.

WDIS: Back to Cool More installments

See All »

Latest tastytrade Videos As of September 25

Most Shared From the last 30 days