Covered Ratio Spreads, Superior to Covered Call? Views invited

[Vij]

@Stonecold

Ok…and since you stated that you have been researching covered call variations, I am interested in knowing other strategies also. Can you name some of them ? I will google them to know more.

I was doing research on mean reversion using pine script and going granular by exporting chart data to excel.

But since you asked, heres another variation to the CRS I mentioned in the first post.
You could additionally layer the CRS further by also buying a future and selling another call and doing away with 1 short put. This way you have a CRS and have “super powered your upmoves(x3) further when within a range”, but sacrifice downside profit potential.

[Stonecold]

But don’t you think most of the risks are in downside move, how can we protect the downside risk ?

[Vij]

@Stonecold

But don’t you think most of the risks are in downside move, how can we protect the downside risk ?

Yes, the future cancels downside profit potential. Nothing is 100% safe. But

1. You can do this in stocks you fully believe in and take delivery if ITM
2. You can look to take off the 1 naked put at the earliest, maybe once a small upmove is done.
3. If you do the additional layering with buying future and selling a call(that I mentioned in the above post), you can do just the 1 naked put which will be the ONLY put.

Basically there will be holes, and if you seal more holes, you go into debit to begin with. Choose your poison.