Covered call and put options as separate trades
Yes, if the call expires worthless, leaving you with stock. Then you can exercise your put when the stock goes below put strike price.
So this is only a useful strategy if you already own the stock and want protection. The ITM put has a delta closer to 1 than an OTM put. But all LEAPS have massive amounts of theta. Since the delta is closer to 1 it will mimic the price movements of the underlying which has a delta of 1. And then you can sell front month calls on that over time. Note, this strategy will tie up a large amount of capital. I understand what you're asking for (you want to write options ON call options... essentially the second derivative of the underlying security), and I've never heard of it. That's not to say it doesn't exist (I'm sure some investment banker has cooked something like this up at some point), but if it does exist, you wouldn't be able to trade it as easily as you can a put or a LEAP. I'm also not sure you'd actually want to buy such a thing - the amount of leverage would be enormous, and you'd need a massive amount of margin/collateral.  Additionally, a small downward movement in the stock price could wipe out the entire value of your option. "A straddle is an options strategy in which one ""buys"" or ""sells"" options of the same maturity (expiry date) that allow the ""buyer"" or ""seller"" to profit based on how much the price of the underlying security moves, regardless of the direction of price movement. IE: A long straddle would be: You buy a call and a put at the same strike price and the same expiration date. Your profit would be if the underlying asset(the stock) moves far enough down or up(higher then the premiums you paid for the put + call options) (In case, one waits till expiry) Profit = Expiry Level - Strike Price - (Premium Paid for Bought Options) Straddle" If I sell a covered call, on stock I own 100%, there is no risk of a margin call. The stock goes to zero, I'm still not ask to send in more money. But, if bought on margin, margin rules apply.  A naked put would require you to be able to buy the stock if put to you. As the price of the stock drops, you still need to be able to buy it at the put strike price.  Mark to market is just an expression describing how your positions are considered each day. I am close to retirement and sell cash secured puts and covered calls on a regular basis.  I make 15 % plus per year from the puts.  Less risky than buying stocks, which I also do.  Riskier than bonds, but several times the income. Example:  I owned 4,000 shares of XYZ, which I bought last year at 6.50 and was at 7.70 two months ago.  I sold 3,000 shares, sold 10 Dec puts @ 7.50 (1,000 shares) for $.90 per share and sold 10 Dec calls at 10.00 for $.20.  Now I had cash from the sale of 3,000 shares ($23,100) plus $900 cash from the sale of the puts, plus $200 cash from the sale of the calls.  Price is now at 6.25.  Had I held the 4,000 shares, I would be down $5,800 from when it was 7.70. Instead, I am down $1,450 from the held 1,000 shares, down $550 on the put and up $200 on the calls.  So down $1,800 instead of down $5,800.  I began buying XYZ back at 6.25 today. Outside of software that can calculate the returns:  You could calculate your possible returns on that leap spread as you ordinarily would, then place the return results of that and the return results for the covered call position side by side for any given price level of the stock you calculate, and net them out. (Netting out the dollar amounts, not percentage returns.)  Not a great answer, but there ya go. Software like OptionVue is expensive "When the strike price ($25 in this case) is in-the-money, even by $0.01, your shares will be sold the day after expiration if you take no action. If you want to let your shares go,. allow assignment rather than close the short position and sell the long position...it will be cheaper that way. If you want to keep your shares you must buy back the option prior to 4Pm EST on expiration Friday. First ask yourself why you want to keep the shares. Is it to write another option? Is it to hold for a longer term strategy? Assuming this is a covered call writing account, you should consider ""rolling"" the option. This involves buying back the near-term option and selling the later date option of a similar or higher strike. Make sure to check to see if there is an upcoming earnings report in the latter month because you may want to avoid writing a call in that situation. I never write a call when there's an upcoming ER prior to expiration. Good luck. Alan" While a margin account is not required to trade options, a margin account is necessary to take delivery of an exercised put. The puts can be bought in a cash account so long as the cash necessary to fund the trade is available. If you do choose to exercise which almost never has a positive expected value relative to selling except after the final trading time before expiration, taxes notwithstanding, then your shares will be put to your counterparty. Since options almost always trade in round lots, 100 shares will have to fund the put exercise, or a margin account must satisfy the difference. For your situation, trading out of both positions would be probably be best. "According to Yahoo, AAPL was trading at $113.26 at 1:10 PM on 11/13/15, which is the approximate time of your option quote.  You provided a quote for AAPL at 4:15, and the stock happened to keep going down most of the that afternoon.  To make a sensible comparison, you need to take contemporary prices on both the stock and the option.  The quote on the option also shows the ""price"" being outside of the bid-ask range, which suggests that the option was trading thinly and that the last price occurred sometime earlier in the day.  If you use a price in the bid-ask range ($21.90-$22.30) and use the price of AAPL at the time of the put quote, you'll come up with a price that's much closer to your expectation." I have an example of a trade I made some time ago.  By entering the position as a covered call, I was out of pocket $5.10, and if the stock traded flat, i.e. closed at the same $7.10 16 months hence, I was up 39% or nearly 30%/yr. As compared to the stock holder, if the stock fell 28%, I'd still break even, vs his loss of 28%. Last, if the stock shot up, I'd get 7.50/5.10 or a 47% return, vs the shareholder who would need a price of $10.44 to reflect that return. Of course, a huge jump in the shares, say to $15, would benefit the option buyer, and I would have left money on the table. But this didn't happen. The stock was at $8 at expiration, and I got my 47% return. The option buyer got 50 cents for his $2 bet.  Note, the $2 option price reflected a very high implied volatility. In the money puts and calls are subject to automatic execution at expiration. Each broker has its own rules and process for this.  For example, I am long a put. The strike is $100. The stock trades at the close, that final friday for $90. I am out to lunch that day. Figuratively, of course. I wake up Saturday and am short 100 shares. I can only be short in a margin account. And similarly, if I own calls, I either need the full value of the stock (i.e. 100*strike price) or a margin account.  I am going to repeat the key point. Each broker has its own process for auto execution. But, yes, you really don't want a deep in the money option to expire with no transaction.  On the flip side, you don't want to wake up Monday to find they were bought out by Apple for $150. Do you need to buy car insurance?  If you do, you are buying to open a put option. Option contracts typically each represent 100 shares. So the 1 call contract you sold to open (wrote) grants the buyer of that option the right to purchase your 100 shares for $80.00 per share any time before the option expiration date. You were paid a gross amount of $100 (100 shares times $1.00 premium per share) for taking on the obligation to deliver should the option holder choose to exercise. You received credit in your account of $89.22, which ought to be the $100 less any trading commission (~$10?) and miscellaneous fees (regulatory, exchange, etc.) per contract. You did capture premium. However, your covered call write represents an open short position that, until either (a) the option expires worthless, or (b) is exercised, or (c) is bought back to close the position, will continue to show on your account as a liability. Until the open position is somehow closed, the value of both the short option contract and long stock will continue to fluctuate. This is normal. Yes, it's completely normal to buy (and sell) puts and other options without holding the underlying.  However, every (US) brokerage I know of only permits this within a margin account.  I don't know why...probably a legal reason.  You don't actually have to use the margin in a margin account.  If you want to trade options, though, you will need a margin account. Being long something is the same as owning it (generally). Being short something is the same as selling it, with the intention (actually obligation) of buying it back in the future. Being 'short' means that you benefit when the price falls.  A call is the right to buy a financial asset, most often a share, at some price agreed upon now, while the the right extends for some defined time into the future. A put is the right to sell something you already own for some price defined now but the right extends for some period into the future.  A swaption is an option to enter into a swap. A swap is an agreement to trade cash-flows at defined points in the future, usually some fixed rate for some floating rate (say LIBOR+200bps).  EDIT: Clarified puts.