Introducing The Amazing Stock Repair Strategy (3)

Here's why.

The 500 shares of stock you have, along with the 5 call options you just bought, will result in an even spread trade.

The reason this is important is because without owning the equivalent of 10 calls (or 1000 shares of the underlying stock), then the 10 out of the money calls you sell would be considered 'naked' and may require an additional margin requirement.

Selling naked calls is considered risky.

However, by owning 1000 shares of stock (or 10 call options) at a lower price, your risk is limited because your sold calls are considered 'covered.'

The chart below shows some examples of the correct Stock Repair Strategy ratios.

The total dollar value of the options' trade should be neutral or very close to neutral.

In this way, you can establish the position without putting out any more money or at least very little.