shouldasold...check the option prices on the Ultrashort ETF's. I have one margin account where I can buy 200 shares of DUG at say $37 a share, then "write" (sell) two covered November $45 Call contracts at about $2.30 ($460). The contract expires November 21 if not exercised and I pocket the $460 and repeat for December. If exercised, I still get $45 a share for my 200 shares that I paid $37 for...win-win.... If the share price drops a lot, I can buy back the Call cheaper and pocket the difference, and write a new Call at a lower strike price. Hopefully the pps doesn't drop too much....
Most of the Options are commanding a high premium right now because hedge funds and other investors are using them to hedge their holdings in a volatile market. You can do a "buy-write" order that buys the stock and sells the option contract at the same time, but I'd rather catch the ETF at a low, then write the Call contract later when (if) the ETF bounces up making the Call option also increase....
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