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kwinam,

You wrote, Here's how i do it when i'm going long - common of course.

sell a put below strike. if it hits, i take the assignment. then sell covered call with strike above purchase price.


Right. Of I find the selling of covered calls rarely profitable; but perhaps if you do the due diligence, it may work for you.

Also, I'm looking to to do the same thing, but for shorting a stock.

So, would i write a cash covered call with a strike above current price. if the strike price is hit, i have to buy shares to cover the call. I then immediately short the stock. Then sell a put with a strike price below current price since i need to cover the short position anyways.


That would be my understanding as well.

Of course the extra step for taking a short position is undesirable. I suppose that's what you're really driving at? So what you'd really like to do is have the cash covered call convert directly into a short position.

Since I've never written a cash covered call, you're outside my experience level so I don't know if any brokers can do that for you. If I were you and interested in making this trade, I'd give my broker a call and ask if it's possible. Let us know what you find out.

- Joel
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