| Don't you just like how delta neutral sounds? It just | | | | put. |
| sounds so secretive and classy. (Or maybe it's just | | | | The first several months pay for the cost of the put. |
| me.) But really it sounds like an exclusive club. And in | | | | After that, it's risk free profits. The put protects our |
| a way it is. Once you learn how to trade delta | | | | downside, and the calls give us income. |
| neutral, you are guaranteed money no matter what | | | | So you see, over time this trade has total disregard |
| market prices do. | | | | for where the price is going. Okay, that said, this isn't |
| Like I said in the last article, we are going to do this | | | | the perfect trade. There is no such thing. |
| through the protected buy/write. | | | | You are not going to get rich trading this. Its return is |
| That's a covered call with a protective put. Now, the | | | | lower because of the protective put. Also, traded in |
| trade itself is not exactly a delta neutral trade. Not | | | | a bull market, this will actually hurt you more than it |
| just as it is, but we add the time element to | | | | does good for you. Yes, you can trade the |
| compensate for that. | | | | protected buy/write in any kind of market, but it |
| See, the way it's done, we buy the stock. And we | | | | excels in the flatter markets or in a true bear. |
| buy a put that's good for six or so months. That's | | | | In a bull market, you are just limiting yourself. You're |
| the protective part of the trade. | | | | better off just trading covered calls. |
| Then we sell calls against the stock for the life of the | | | | |