Half covered, half naked: one extra call turns a covered call into a tent with two breakevens. This lesson shows where the extra premium comes from, and where the losses move to.
After this lesson you can
- Work out a ratio write's peak and both of its breakevens
- Explain why it doesn't win more often than a covered call, and where its losses move to
- Change the ratio or the strikes to reshape the tent
- Set action points inside the breakevens, and know what a gap does to the naked half
- Keep the margin and assignment rules of the naked half in view
Chapters
- 0:00Half covered, half naked
- 1:38Two calls, one set of shares
- 3:14A tent with two breakevens
- 4:59Next to the covered call
- 6:27Where the tent sits
- 7:46Other ratios
- 9:26Action points
- 11:05Gaps, assignment, margin
- 12:24Five mistakes
- 13:40The whole lesson on one screen