> There are actually 3 outcomes, which you should know if writing covered calls because you are essentially betting on the third option, which is that the stock stays flat, ie it doesn't move.
No, you're just betting that it doesn't go past your short strike, which could be few percent above the current price.
The strategy is simple: Most long options expire worthless. Selling something that will soon be worthless is not a bad business.
I would imagine you would agree with my statement that buying OTM calls and puts is bad investment advice and likely to lose money?
Yes?
Ok, then why are you so against taking the OTHER side of that trade?
No, you're just betting that it doesn't go past your short strike, which could be few percent above the current price.
The strategy is simple: Most long options expire worthless. Selling something that will soon be worthless is not a bad business.
I would imagine you would agree with my statement that buying OTM calls and puts is bad investment advice and likely to lose money?
Yes?
Ok, then why are you so against taking the OTHER side of that trade?