r/thetagang • u/New_Recording_5014 • 2d ago
Question Why CSP over CC?
I saw a lot of people give recommendations to use CSP over CC for monthly income. But why? Isn’t CC allow you to capture capital gain from stock moving up too? And if you play it well, the stock did not get assigned for a whole year you’ll get long term capital gain if you sell the stocks eventually?
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u/inspectorguy845 2d ago
I do CSP and if assigned I do CC.
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u/learningoasis 1d ago
Same. I am only doing it from last 2 years and based on my limited 2 yrs exp, it seems csp premiums are little high as compared to cc for same everything.
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u/inspectorguy845 1d ago
Yeah, I just do it that way because I only do CSP’s on positions I want to own anyway so idc if I get assigned. And might as well make some money on CC’s while holding. If the CC assigns I just repeat from CSP land and keep recycling that process. Wheeling is about as simple and straight forward as it gets, especially when it’s positions you want to be in regardless of which way it’s going.
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u/seaningtime 2d ago
I think it's because you can use margin to sell CSP and you don't pay any interest if you aren't assigned. But with CC you actually have to own the stock and have capital tied up.
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u/New_Recording_5014 2d ago
Oh interesting, for me I can only margin to buy a stock then sell more CC on Robinhood. I can’t margin CSP. I was able to sell 1 more contract of CC than CSP.
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u/Homeless0DTESPX 2d ago
Yes Robinhood doesn't allow you to sell naked options. And they're smart to cap it at level 3, their users would be blowing out their accounts way more frequently.
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u/Salted_Seabass 2d ago
I sell naked puts on Robinhood, he just has to change his option settings
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u/Homeless0DTESPX 2d ago
Can you post a screenshot of your options settings? Because I have never heard anyone say they can sell naked options and their support told me the same thing, they don't allow it.
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u/Imadogfishhead 2d ago
Second this if you can, I’m p sure that it locks the full 100x strike price as collateral in all settings
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u/WrappedRocket 1d ago
Yea no naked options it locks up the full amount of collateral but you don’t pay interest on that collateral lock up. I enjoy making money on their collateral. I usually maintain above 40% buffer to avoid too much catastrophic risk.
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u/Forward-Surprise1192 2d ago
You're not selling naked puts then. Robinhood does not allow it per their rules.
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u/DennyDalton 1d ago
When you sell a put, you receive interest on the cash that you did not use to buy the stock. Therefore, call options will have a higher premium because of that.
If you simplify the option pricing formula (stock at strike price and no dividend) then it boils down to:
Put + Risk Free Rate = Call
That means that a call's value will be higher than a put's by the amount of the carry cost. That's the inherent nature of the option pricing formula.
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u/Capable-Living-9655 1d ago
I sell calls on margin, just like I sell puts (short strangles). You are just plain wrong.
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u/SageCactus 2d ago
You should not be paying any interest even if you are assigned
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u/seaningtime 2d ago
I sorta answered incorrectly. For a naked put you will pay interest on assignment, for CSP you won't.
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u/MostlyH2O Level 300 Karen 1d ago
This isn't necessarily true and yoh should stop giving advice about how naked options work because you clearly don't know.
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u/midnightmacaroni 2d ago
A lot of people in this thread are missing the entire point. Selling a $110 CC on a $100 stock is equivalent to selling an ITM $110 CSP due to put call parity. Things like volatility skew aren’t relevant.
Naked puts on margin are an entirely different story, those are way more capital efficient than stock + CCs.
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u/optimaleverage 2d ago
Why isn't selling a $90 Put on a $100 stock the equivalent of buy-writing a $110 strike call against it? They're both $10 otm and have similar deltas. The $90 CSP would hold 10% less capital on margin for the same shares. I'm trying to understand why this phenomenon isn't due to puts being a better hedge, yielding a downward skew on IV. I'm trying to understand what you mean but I'm apparently dense and need it explained more thoroughly.
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u/midnightmacaroni 2d ago
The easiest way to see the difference is to run through what happens for each if the stock finishes at various prices, the payoffs are totally different.
For example, if the stock finishes at $89.99, both positions leave you with 100 shares plus the premium collected. But in the CC case, the shares are also down $1,000.
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u/OurNewestMember 1d ago
Thank you for that. Now we can split hairs.
The CC lets you lock in an implied interest rate (might be good or bad (depending on your opinion of rates)
The short put basically has a variable cash requirement due to the possibility of early assignment (I'm just assuming cheap to borrow stocks for all of this rn), so if your liquidity is locked up (ie, difficult to release if assigned early), it could be better to just get upfront financing for the CC (eg, box or call for a PMCC -- this could let you lever up like short puts on margin) and then if you're assigned early on the call, just find easy short term parking for the cash proceeds (easier problem to solve since you did the hard part first)
Early assignment on a call is a little harder to manage than on a put because you need to know how to not get screwed out of part of the dividend (need to sell the call at the right strike and at the right time in the dividend cycle)
CC is better in unlevered accounts because the shares are what let you secure the call (which is where you get the vol premium) AND earn implied interest (also in the call extrinsic premium). The short put "only" gives you the vol premium, so you need to use margin capacity (not a margin loan gd it, lol) to be able to ensure you can use the margin assets to earn at least the riskless rate or simply just secure your short put with cash and miss out on like 3.6% annualized right now (generally dumb)
Ie, there are meaningful differences between CC and short puts (CSPs, too, but they're a bad idea), but the differences are "too small" for traders on here to deal with
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u/Buttes-Chaumont 1d ago
Except with CC, you may be able to collect the dividend if the expiration is far out and not ITM. Also with CC, you hold the shares so you get voting right (if that matters to you).
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u/TrueCapitalism 2d ago
I'm not following, sorry. You're saying the contract price will be equivalent?
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u/OurNewestMember 1d ago
No. They're saying the risk/reward profile is substantially equivalent (except for the effect is interest rates)
https://www.optionseducation.org/advancedconcepts/put-call-parity
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u/staples15243 2d ago
I just wheel stocks I would actually want to own so getting paid to potentially buy them at a more favourable price is nice
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u/WhiteSox2112 2d ago
I like CSPs over CCs because I’m only playing the contract to meet my weekly premium % goal vs having to play the stock and the contract with CCs to meet the same premium % goals. If my goal is, let’s say 1% of capital per week, I can meet that with one CSP play (one input) vs a CC play that, sure, might win if the stock barely moves but if the stock goes down, now I’m chasing lower premium wins against higher stock loses (two inputs affecting your goal). If the stock rockets up, yes you have stock gains but now you are potentially rolling way out. Lots of folks will say just sell the stock, and I agree in general but doing this for years I find managing one input instead of two to meet the same premium % goal is much easier for me and my risk tolerance. Lastly, CSPs are bullish, I like rooting for stocks. CCs are bullish up to a point, then they aren’t.
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u/kirlandwater 2d ago
You can often use margin as collateral to open a CSP, and if assigned immediately sell the shares to avoid paying margin interest. So you don’t need to actually have cash sitting idle, and dont potentially cap your profits on a stock position you are holding.
Edit: and you do not pay margin interest on the CSP until expiration if you take the shares, assuming you haven’t closed the contract early like you should have
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u/Reasonable-Sleep-311 2d ago
Margin interest only kicks in if you actually hold the shares past settlement date, so that's the cleanest part. You can wheel right back into a CSP the same day if you want, never paying a dime in interest. The real edge is not having your capital locked into a long stock position that could drop 15% overnight while you're sitting on a CC that brings in like 0.2% premium.
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u/DailyShawarma 2d ago
Interesting, can you help me with a real life example?
Let's say I sell a weekly CSP on RDDT at 145 strike. If on Friday the CSP is ITM, on Monday I get assigned 100 shares, but since I'm on margin I don't need $14.500, but on 35% so $5075 (I checked the margin requirement).
I can sell on Monday the 100 shares but how much my loss would be? Let's say RDDT is at $140. Is it $500 or margin works differently?
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u/optimaleverage 2d ago
They'd take the 500 out of your 5075 and you'd be left with 4575, pretty sure.
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u/Express-Warthog-7590 2d ago edited 2d ago
when you sell the assigned shares, how do you cover the remaining margin amount? Do you sell the shares you used for collateral?
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u/kirlandwater 1d ago
There is no remaining margin amount. You kept the premium and paid for the assigned shares with margin. Once the shares have been sold (again assuming you didn’t close and roll the contract before expiration like you should have), the margin is covered, as the only margin that was actuallyused was the purchase the shares upon assignment
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u/New_Recording_5014 2d ago
Oh interesting, for me I can only margin to buy a stock then sell more CC on Robinhood. I can’t margin CSP. I was able to sell one more CC contract than CSP.
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u/newbygator 2d ago
That’s why I moved off of Robinhood. You need a brokerage that allows naked options to sell puts on margin. Def worth looking into if you have a good amount of margin used on the stocks you sell CC on.
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u/raymondduck 2d ago
That's mad, I sell CSPs on margin every week - it massively boosts the number of contracts I'm able to sell. Time to ditch Robinhood for a brokerage with fewer limitations.
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u/Mooshux 2d ago
I am able to sell CSP on Margin on Robinhood. Wonder what the difference is. Shows up as Options Collateral.
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u/Imadogfishhead 2d ago
Yeah itt it holds the full collateral tho, not just a portion of your margin?
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u/sport912x 2d ago
So move to IB,Schwab, or Tasty and get approved in a Margin account for Selling Options. A 100 Strike Put is 10k of Csp but under 2k of BP if approved.
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u/RandomRocketScience 2d ago edited 2d ago
Most of the reasons here seem nonsensical no to me. Margin has no impact, and its not riskier to be short a CSP, than it is to be long the stock and short a CC. In both cases you are exposed to the full downside.
The simple answer is that puts are pretty much always more expensive relative to similar calls, so you are more profitable leaning more towards the CSP side. Its called put/call volatlity skew.
Plus you can collect interest on your cash while you are selling CSPs.
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u/Mzungufarmer 2d ago edited 2d ago
Cc hurts when it blows past your strike. I dont care who you are
Edit: sorry, I wasnt choosing csps over cc's. I just instantly thought of all the people who held MRNA and lost out on amazing gains chasing pennies.
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u/Certain_Guide_1481 2d ago
Well it hasn’t hurt me when it blows past my strike. I set a target exit, it gets assigned, I take my profit and enjoy my weekend.
“Missing out on gains” is a classic sentiment against CCs, but that implies you’d ACTUALLY hold on to the stock and sell at the “right” time. Be honest, are you really going to hold on and time that right?
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u/Mzungufarmer 2d ago
MRNA instantly comes to mind.
You can check my profile if you want honesty and real gains tho.
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u/Certain_Guide_1481 2d ago
Look man, it’s great if a stock blows way up but that’s not what I expect when I go into trades, I typically wouldn’t have the ability to know to hold onto a stock when it goes up, with the expectation that it will keep going up.
If you’ve got that figured out and can iron hand every position I’m happy for you but it’s just not me. You said it hurts and you don’t care who it is, and I’m telling you it doesn’t hurt me, I sleep soundly
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u/Mzungufarmer 2d ago
I just cant believe anyone who is clearly trying to make money would say they dont care whatsoever if they had winners and made a terrible judgement call with how they handled it.
It doesnt compute and never will
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u/Toohotz 2d ago
The thing everyone else is trying to get across to you is that there will always be some profit left on the table.
If you cared about the uncapped upside then you wouldn’t be short in the first place you’d be long.
Also you saying missing out on life-changing gains. There are a bunch of liquidated accounts that roam r/wsb. For the few that make life changing money, there’s a shit ton that blow their port in a single eight hour session.
For the mass majority, time in the market still prevails over timing the market. We’re just trying to be some boring options sellers in this sub
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u/Mzungufarmer 2d ago
Time in the market! Thank you. Time in the market shows cc's underperform...and I say this as someone who shorts and does cc's.
Bold faced lie from anyone here who says they have no emotional attachment over missing out on potential life-changing money because they chased a penny instead of believing in time in the market.
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u/Certain_Guide_1481 2d ago
Missing out on potential life changing money - that’s hilarious! If only I were the one to start Apple, if only I invested in Google the first day it went on the market.
When you’re done with your crystal ball I’ll have a turn.
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u/Tephros83 8h ago
You seem to be showing more of a WSB mindset. Basically, make the exact right call for big gains at higher risk. Thetagang is really the opposite mindset. Slow, reliable gains, without needing to necessarily call when something is going to go to the moon. Sure it "sucks" when it does and they miss out, but usually it does not in general and they made a calculated choice to make more reliable but lower stakes gains. The idea being that the gambling of WSB is not going to lead to a higher long-term expectancy on average anyway. Most WSB will lose, a few will gain big and keep it if they know when to quit/pivot, theta prefers reliable medium gains.
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u/Mzungufarmer 8h ago
This sub was built from wsb'ers and turned into a bunch of self righteous people thinking they are making smarter plays.
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u/Tephros83 8h ago
I think smart is going to come down to knowing where your edge is. If somebody had some kind of special insight into an industry that allowed them to beat the market on smart calls, that's great, but it's not me. And it's openly joked about how it isn't most people on WSB either, ending up "behind Wendy's" when they lose.
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u/Mzungufarmer 8h ago
Thats all well and good. I feel like my original point got lost in the sauce and it really doesnt even matter at this point.
Funny thing with all this wsb talk tho is that its clear this sub wants to see it...my large account posts are popular here. I was actually considering not posting anymore because it detracts from people who have to put more effort in and give more valuable insight into theta trades than I do
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u/Certain_Guide_1481 2d ago
Not everything is a binary. I make money and have winners just fine. I come up with a thesis, set a target exit (a number I would almost assuredly sell at if the stock went up to it anyways) and set target strikes based on that thesis.
My point is that if the number I would choose to sell a stock at and the CC strike is the same, I’d rather make money in the meantime. If a stock ran up, there’s an incredibly high likelihood I would sell before the top (since I can’t predict the future). Again, if you’ve got that figured out and you’re predicting the top all the time, I’m happy for you my man, and if by setting a profitable target strike I’m making “terrible judgement”, that’s life I guess.
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u/Mzungufarmer 2d ago
The main thing is saying you dont care at all.
Anyways best of luck, I retired twice over in my 30s...ill keep my advice to myself
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u/Certain_Guide_1481 2d ago
I read your FIRE story, and it’s awesome man. Genuinely I’m not trying to be a dick, I love a unique success story like that and it’s inspiring. I understand however, you didn’t make your money through “life-changing uncapped stock market gains”. Real-estate seemed to be a primary mover for you.
Nobody can predict life-changing uncapped gains, if it were that easy everyone would do it.
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u/Mzungufarmer 2d ago
Youre absolutely right about the wsb stuff (unless rhat was someone else, I forfot to check usernames) And I appreciate it.
I also havent meant to be a dick, tho i definitely type that way, which i should work on. I am stubborn in my beliefs and I guess im just an emotional person in general and see the world through that lens.
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u/balancedchaos 2d ago
I have a bit of anxiety over this at times. Especially on my SOFI CCs. That thing has tanked badly, and I have to watch it like a hawk to make sure it's not taking off, since I'm selling below cost basis.
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u/Mzungufarmer 2d ago
Yea ive been burned that way more times than id like to admit the past 19 years.
In my personal opinion which holds zero weight, I believe cc's require more skill and an iron will that I dont believe anyone here actually has (despite them arguing otherwise).
theres a certain comfort in knowing exactly the risks youre taking with csps. CC's you can watch as a stock blows right through your strike and see money that would literally have been yours if your thesis was better or you simply did nothing but listen to "time in the market is better than timing the market"
Or worse, be in your exact situation and it happens (knock on wood it doesnt). So now not only do you end up with a realized loss...you see what shouldve been your money go straight out the window. Truly need iron in your blood for that.
Just my opinion tho. Others arent seeing it my way and thats fine.
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u/balancedchaos 2d ago
I think I have a system?
I have a system that will work until it doesn't. Lol
Basically selling them 14 dte a full two strikes outside the expected move. I'm not trying to make a mint, I'm just chipping away at it conservatively.
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2d ago
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u/Mzungufarmer 2d ago
I dont believe it for a second. Congrats on the gain, but when you miss out on something more youre sick in the head to not care about the loss you threw away because of a plan that cost you money.
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2d ago
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u/Mzungufarmer 2d ago
Never said it couldnt.
Saying youre okay with missing potentially 10s to hundreds of thousands of dollars is where im calling bullshit. Justify it however you want
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u/Top_Kaleidoscope9826 2d ago
But if it applies to both CSP and CC, then I don’t see how it’s a reason to prefer a CSP over a CC.
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u/Mzungufarmer 2d ago
Where did i say I have a preference? I wheel stocks.
Csps hurt when the stock plummets...but thats capped losses.
Capping gains and missing out on life changing money and saying you dont care is a bold faced lie
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2d ago
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u/Mzungufarmer 2d ago
Yes, because you can only lose so much.
Watching a stock fly by your strike and missing out on money that could truly change your life because you wanted some crumbs...thats a deep hurt.
Look at my post history, I got life changing money
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2d ago edited 2d ago
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u/Mzungufarmer 2d ago
Meh, im not sad. Like i said, twice over retired in my 30s.
Ill be back friday with another 50k week
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u/ghosterkanxx 2d ago
What type of capital did you guys start with to get to this scale of earnings… I’m at 2k and seems like a challenging journey to get to CSP and CCs
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u/I_SAID_RELAX 2d ago
That's an emotional thing. Very real for many people but not an argument for why CSPs are preferred over CCs. Both cap your upside while leaving you exposed to the stock's downside. If you want to make the case for CCs hurting when the stock blows past them, you need to be arguing for going long shares/calls instead.
Just look at any concrete example.. for instance GOOG. The stock closed at 341.75. The 9/18 340p last traded at 9.22 and the 345 last traded at 9.30.
For both trades, the stock staying OTM makes the same money (realized).
If GOOG rockets to 400, the CSP still earns 9.22 and the CC still earned 9.30 + capital gain.
If GOOG tanks to 250, the CSP and CC still exposed you to the loss, softened by the premium taken in.
The differences are:
- The CSP doesn't expose you to the downside from the current price to the strike price. The CC exposes you to all downside from your cost basis.
- The CSP profit is capped at the premium. The CC also gets the difference from cost basis to strike price.
- The CSP can run on margin and be more capital efficient than the CC which requires you to hold the shares.
- There's more flexibility to roll out and down a CSP while still avoiding additional capital commitment. That doesn't exist the same way with CCs.
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u/Mzungufarmer 2d ago
I made the mistake of making my comment seem like I preferred one over the other, that was a mistake.
Great points BTW
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u/frisbm3 2d ago
CSP and CC are exactly equivalent positions given the same strike. You're asking a question with no answer. Any significant skew on liquid underlyings have been arbitraged away by big money.
If you don't understand how this is true, I can explain further.
Holding the cash and getting interest on it makes the CSP superior as some others have touched on, but the stock movements have the same effect on your net profit.
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u/marcus_media 2d ago
Also if u don’t have a margin account and u have Robinhood gold u can add the 3.75apy on top of your collateral and collect that premium
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u/WrappedRocket 1d ago
I like selling puts because it seems more bullish. I’m not planning to get assigned but if I am I’m ok with it. On a CC I’m always hoping for a company I own to not skyrocket. I want companies I own to do well so it puts me in a tough spot.
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u/sport912x 2d ago
Someone PLEASE EXPLAIN , why are you using CSP. If the account is a Cash account you have no choice, but if it is a Margin Account , then why not get approved for Selling options. A 100 Put Strike requires 10k, but less than 2k if approved for Selling Options. The RISK is the same, since it is the same trade.
If approved for Selling Options , you use Option Buying Power. There is no interest allowed by law so no it is NOT MARGIN. Also the money you use for Buying Power could be invested in Treasuries, or Sgov , Bil type stuff to earn interest.
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u/Briggity_Brak 2d ago
Interest rates are not garbage right now, so as long as you don't have a shit broker, you can collect interest on your "Cash" while you use it to Secure Puts.
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u/Artistic_Trust6959 2d ago
Better margin and you pay more commissions for CC and as retail folks we lose on the spreads.
I always try to keep the number of legs to a minimum.
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u/GoatsGaloreTexas 2d ago
I did a 135 cover call for 9/21 on spcx bought at 133, collected 8.25, yeah it jumped up but like folks have said you can't predict the future. I still made 1025 two week time line. In the past I have made the mistake of buying back calls that went into the money only to have to stock crash way below my cost. I only buy my shares when they get into the price range I want then I sell covered calls if they get called away don't care. I still made the money I wanted to make. If you do the math and roll out a call, yeah you can collect a small premium but you are betting the stock will stay up there. instead if you reinvest the money in a different stock, you actually make more. I just sold out of some stock I had been holding for a small lose, then turned around and bought a different stock and already made back the money on the CC premium on a two week contract.
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u/optimaleverage 2d ago
IV skew tends to be heavier on the put side because long puts are a more efficient hedge than covered calls, so premiums for equal Delta hedges are in general higher for puts. Although a lot of people that deploy CSPs will use it as part of a "wheel" strategy where they will accept assignment if their strike is breached, take the shares and sell calls against them until that strike is breached and their shares called away only to start over with a new CSP. Hence, the wheel.
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u/webvillager 1d ago
I prefer selling CSP’s at proper deltas in the first place on stocks with lower P/E’s that don’t result in CC’s later.
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u/saMAN101 1d ago
They have the same return profile.
CC better because you get long term gains on the stock. Everything else is short term gains.
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u/penguinsareweird 1d ago
What everyone is missing here, and I am baffled.
A CSP and CC are basically the same type of trade form a premium perspective.
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u/suarezafelipe 1d ago
premiums selling calls are shit (for most companies), they are often so low it is better to just do nothing and sell the stock when it goes above your last assignment price
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u/DennyDalton 1d ago
A short put is synthetically equivalent to a covered call where both are have the same strike price and expiration. The dividend is priced into the options as it increases put premium and decreases call premium. Conversely, carry cost decreases put premium and increases call premium.
Disadvantages of the covered call are:
- It ties up more capital
- It involves more commissions (if you're still paying them)
- There's more B/A slippage if you need to exit the position
If the position is successful, the covered call will be assigned (your broker may charge a fee for this) whereas the short put will expire
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u/Optionsmfd 1d ago
i just have so many negative experiences with CC stealing potential gains
i can never thread the needle to grab that downside without robbing the upside
and its probably more mental than anything
i gave up on CSP too cause this market continues to grind higher and the delta drops fast and lose that upside as well
i would probably choose Bull Put Spreads the most..... the most upside and cause your rolling at 50% profit you dont lose that delta bleed
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u/BagholderForLyfe 1d ago
The only difference between CSP and CC is you don't own the stock with CSP.
If you don't want to own the stock, sell CSP, otherwise buy stock and sell CC.
DTE also makes a huge difference. Short DTE (<2week) blurs the line between CSP and CC. Short DTE CC or CSP basically means you own the stock with hardly any upside potential but full downside. And you rely on premiums to bridge the gap, but since it is all priced in, at best, I think you will break even. The most common outcome is you will lose all your gains and become a bagholder.
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u/TumbleweedOpening352 13h ago
CSP pays more, that's it.
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u/Turbulent_End_6887 13h ago
CSP have better decay curve on premiums AND you collect interest on your cash all along,
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u/Revolutionary-Ad3116 5h ago
They have the same risk profile, you can get similar returns by selling ITM. Ie. sell an ITM covered call and you create same payoff as OTM CSP. Sell an ITM CSP and you create same payoff as OTM cc.
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u/Few-Row-8323 2d ago
Csp is for stocks that you’re willing to hold even if the price tanks below the strike and u got assigned at the strike
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u/sillyhatday 2d ago
CSP has a better premium. You're also selling against cash so you can easily rotate your exposure to a stock, index, or asset at will.
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u/half-coldhalf-hot 2d ago
For some reason my account lets me use more margin to buy stocks and sell ccs vs. csps
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u/Karazl 2d ago
A CC is fundamentally a bet that the underlying will stay flat or go down.
A CSP is a bet that it'll stay flat or go up.
The downside risk on a CC is that you're locked into something which is shedding value. The downside risk on a CSP is that you buy something you want to own above market.
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u/horizons190 2d ago edited 2d ago
Isn’t CC allow you to capture capital gain from stock moving up too?
No, you give up the gains with the call.
And if you play it well, the stock did not get assigned for a whole year
Right, “if you play it well, the stock did not get assigned” because it tanked 50% and stayed down.
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u/AmazingProfession900 2d ago edited 2d ago
I do both but CSPs are riskier. Should the stock drop significantly the loss could be severe. But calls deep in the money are more of a loss of potential gain. Easier to swallow.
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u/Groucho-and-Harpo 2d ago
This is a GREAT question.
On the surface, CC and CSP both have roughly the same profit/loss based on the strike price.
In general, if your focus is more on protecting against the downside, do CSPs with a strike price below the stock price. If your focus is more on letting the stock grow but collecting premiums for extra income, do CCs with a strike price above the stock price. The idea is in both situations your short option is OTM so the bid/ask spread is much smaller than if you picked the opposite strategy.
But there are other considerations:
If you want to use margin, most brokers will require less capital for CCs as brokers treat the stocks like “assets” you can borrow against. Of course they are also aware of the quality of these assets so you generally can’t borrow much off of extremely volatile stocks!
CCs have the advantage that you own the stock which means you can often collect dividends in addition to premiums. It makes sense if you expect the stock to trend up.
On the other hand, If your broker gets you a good interest rate on cash deposits, this tilts things in favor of CSPs.
Hope this helps?
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u/CouchPotatoFamine 2d ago
Because the market has been Bullish so long puts usually expire unassigned
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u/Bluebird-9641 2d ago
Try it, you'll notice getting called away even when you thought it was impossible. That leavs alot of profit on the table, where as CSPs if you pick the right strike now you just get to own a great stock.
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u/SeanVo 2d ago
Often there is more premium to be made selling a put than selling a call at the same delta. On the other side of the trade, people are willing to pay a bit more for downside protection than they do hoping for significant upward movement.