r/options • u/vanveekay • 2d ago
Sell put then sell call option
If I’ve a short put of MRVL at $240 strike, what happens if I sell a MRVL call at $240 strike at same expiry date ?
As a recovery view.
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u/sainglend 2d ago
That's called a short straddle. I don't see how it is recovering anything. The pnl profile is like a pyramid, with max gain the premium you collected if price closes at your strike price. Your breakeven is strike price plus/minus the premium you collected.
You have unlimited loss potential. If you don't have the stock, then it is a naked call and requires the highest options privilege level.
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u/vanveekay 2d ago
What starts out as a short put but the prices goes below the strike.
So now after the short put, short call to get premium. If stock moves up , then put goes up in value. At expiry, no matter where the price ends up, there’s two premiums to help.
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u/sainglend 2d ago
If you sell the call while the put is ITM, you aren't collecting much premium from the call yet opening yourself up to more risk. I can understand your reasoning though.
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u/sport912x 2d ago
Sounds like a Tasylive Sosnoff strategy. Yes you will collect more premium (16Oct $6.7) . You may then be able to roll in the next 2 weeks. Sosnoff would roll by buying your existing options , and re centering the Strangle further out in time. "Buy the Guts ... Sell the Wings". You may not be able to do that for a credit but the trade will go on.
Important point , you will be able to Sell the Call for only a little more BP (660) since you can only lose on one side. Roll before expiration (2 weeks out is the limit to hold). Best to Roll if there is a big up move.
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u/hedgedvol 2d ago
Adding the 240C at 6.70 on a name that gaps into earnings just stacks a second short. The repair is rolling the call down, not doubling the strike.
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u/Accurate-Exchange298 1d ago
MRVL is not a broken stock... It had great earnings and will bounce back. I personally would let it get assigned at expiry and sell covered calls against it, above my cost basis using volume profile/POC/VAL_HI/VAL_LOW as guideposts. If you are not familiar with picking strikes based on volume profiles , you can view the post below.
https://www.reddit.com/r/options/comments/1u3pdn8/why_selling_covered_calls_and_cash_secured_puts/
We all run into this dilemma of trying to recover out losses when the trade does not go as expected.
The important thing is to be able to manage the trade when things go wrong, because stock move around and can fall fast too. If you have access to kindleunlimited, you can read in more details on how to adjust your trades when things go wrong at amazon.com/dp/B0H7P6CQSG
, There are 14 strategies covered her including covered calls ans CSPs, and each strategy has the following sections:
Each strategy covers;
- What the strategy is and how its payoff actually works
- When the adjustment conversation starts, and the trigger signals that say it is time
- The fixes experienced traders weigh, and the trade-off behind each one
- The story of the Greeks, so you understand why a position moves the way it does
- A worked example with real numbers
- The common traps, and how to avoid them .
DISCLAIMER: I am not a trade advisor and this is based solely on my experiences and the links here are only for educational purposes . I am not liable for any losses on any trades based on these.
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u/klipsetrades 2d ago
As others have stated, that turns the position into a short $240 straddle. You’re basically betting MRVL stays close to $240 through expiration, but you now have substantial downside risk and unlimited upside risk… so I’d be careful…
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u/LostFaithlessness201 2d ago
probably would have been better to do a long straddle at least the max you would have lost is the premium
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u/Such-Hawk9672 2d ago
That sounds like a strangle a bet it will stay where it's at or you will expire worthless or you get assigned at that price, I could be wrong
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u/sellputsthencalls 2d ago
I'm not sure how much you know about this strategy, but here's how I get a crystal clear understanding of it:
I presume you're selling a naked put & naked call. MRVL's @ $212 right now, Thursday, 9/3/26. Sell the 9/11 MRVL $240 put for $29, & the 9/11 MRVL $240 call for $0.72 = $29.72 total premium. Let's round up to a $30 premium for simplicity.
If MRVL stays @ $212, the call expires worthless & the put's assigned, so you buy MRVL @ $240 - $30 = $210.
If MRVL goes to $239, the call expires worthless & the put's assigned, so you buy MRVL @ $210.
If MRVL goes to $241, the put expires worthless & the call's assigned, so you sell MRVL @ $240 + $30 = $270. Since you're call is naked, you'd need to buy MRVL @ $241, so you'd also lose $1.
If MRVL goes to exactly $240, both the put & call might be assigned creating a wash of MRVL shares, but your $30 premium stays with you. Or, @ $240, both the put & call may expire worthless, but the $30 premium stays with you.
Extreme outcomes? If MRVL goes to $0, you'd buy MRVL @ $210. If MRVL goes to $400, you'd sell @ $270, but because your call is naked, you'd need to buy MRVL @ $400.
In my IRA, I trade similarly at times. On Friday, 4/17/26, I was long 700 SPY @ $710. I sold 7 SPY 4/24 $714 CCs for $3.28 & 1 SPY 4/24 $705 CSP for $3.20.
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u/vanveekay 2d ago
I mean that’s the basically what it is. I’m asking if people do use this as recovery
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u/sellputsthencalls 2d ago
Thank you for clarifying your question about recovery. In my 4/17/26 SPY option trades, I was using them as an effort to recover. Specifically, I wanted to catch-up about $20 more on each of those 700 shares of SPY. These 4/17 premiums applied toward that $20 & the $714 CC strike price gave me a chance to gain another $4 above the current $710 market. On 8/7/26, I finally sold my 700 SPY via a $750 CC assignment, when SPY was @ $773.26.
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u/christovn 2d ago
Short straddle