Just thought of a possible risk free trade strategy. In options why
wouldn't one take a 2 to 1 to 1 spread in money distribution and
just Sell a call for 2 buy a call for 1 and buy a put for 1. Seems
like all your bases are covered that way.
So you have $40,000 dollars for options trading apple, would it be fool
proof to allocate $20,000 and sell a call ( need a margin account for this )
then $10,000 dollars to buy a call, and $10,000 dollars to buy a put.
This way it seems that your covered if the stock stays flat within '
the price of the call sold, and your covered if the stock moves in
either direction. Need to practice this trade using the mock
account at Options House. I shall run this trade for a month or
so and see how it goes.
Ran the trade with AAPL for 40k in virtual funds in selling a call
the Jan 190 2012 Call for $20,005 cost basis. Bought a call at Jan
295 strike Call for $10,050 bucks. and Bought a PUT at Jan 485 Put
at $9,875. The trade starts out with a deficit from commissions
and Spreads between Bid/ask at only a $150 dollar loss, lets see
how it goes over time.
