WealthBee Knowledge Base - Option Selling Strategies | Trading Journal Guide

Option Selling Strategies

Covered Calls and Cash-Secured Puts

  • Covered Calls (CCs): Involve selling call options on stocks you own. If the stock rises above the strike price, the stock is sold at the strike, and you keep the premium. If the stock does not rise above the strike, the call expires worthless, and you keep both the stock and the premium.

  • Cash-Secured Puts (CSPs): Involve selling put options with enough cash in your account to buy the stock if assigned. If the stock falls below the strike price, you buy the stock at the strike price, potentially at a loss, but you keep the premium.

Other Strategies

  • The Wheel Strategy: Selling CSPs and, if assigned, selling CCs on the acquired stock.

  • Volatility Crush Trade: Selling options before an expected decrease in implied volatility, such as after earnings announcements.

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