I have bought shares in QQQ and sold an option against that. There is S&P stock - ticker OEF . Is anybody buying/selling as shares or options. Is this product widely traded like QQQ. Feedback much appreciated. Thanks
Osho67 - OEF looks like a particularly illiquid contract. Open interest for the near month ATM calls (Feb 57 calls) is only 1512, compared to the near month ATM calls on the QQQ (Feb 37 calls)with open interest of 188,458.
The puts are even worse. Open interest of just 12 on the Feb ATM 57 puts for the OEF compared to 340,380 for the ATM feb 37 puts for QQQ.
If you hold contracts for OEF and you want to close, who are you going to sell them to? Even the shares are only showing average daily volume of about 1000. Not an issue for trading IMHO.
Osho - a collar is what you've just said you're about to buy!
If you own a stock you can buy a put option with a strike price underneath the share price to protect you in the event of a collapse in the stock price. This will often be paid for by the sale of a call option with a strike above the share price. This also has the effect of putting a "cap" on the potential profit you will gain by any increase in the share price, as with a covered call. That's why the sale of a call above the stock price to buy a put below the stock price is sometimes called a "cap and collar".
Roger, Thanks so much. Terminology in names of strategies in US and UK seems tobe different . I had been doing covered calls in UK and because of high commissions and spreads I had never protected myself.Mostly I have done alright, but now I am trading in US options and I want to increase my exposure so it is wise to protect as well.
Will it be possible for you to give some strategy in general which will generate income with least capital outlay or more capital outlay and high returns.