Thread by @KatariyaPran

Many use Cash Covered PE to try and buy stocks at prices below spot or generate income if those prices are not hit. So, if you like Tata Consumer at around 740- it currently at 760- you could sell the ATM 760PE for 22. If target price is not made you can get to keep the entire 22

Personally I prefer doing this with an OTM Straddle. So I will sell a 780 or 790 Straddle for 50. That way, I have the possibility of making much more if Price remains above 760. It opens out some upside Risk but a Straddle is easy to defend when Risk is on only one direction

Results are particularly good when this is done with a slightly bullish stock. I sold a 2000 Straddle in Deepak Nitrite for around 205 when spot was 1900 with a willingness to take delivery around 1800. Although the Stock is up 6%, the Straddle is in an MTM profit of 45per lot

Now I have the option to shift the Straddle to 2100 at no cost and pocket the Profit of 45. There is also the possibility of selling some Naked PE. If Price moves up a bit, I will shift the Straddle to 2100 and sell a 1900PE for 20 increasing the profit potential from this trade

Sorry- upto 22.