Katie and Tony's strategies with stock have working out relatively well for them recently. Given that they closed a few short calls in BRCM, the team looks for another bearish trade, this time in BBY. With a high IV rank and plenty of capital to spare, the duo decides to employ a Covered Put. Consisting of shorting the stock and shorting a put (the opposite of a Covered Call), the "aggressiveness" of the trade varies depending on the strike chosen for the short Put. The closer to the ATM strike, the less aggressive the trade is, as the number of positive delta (from the short put) reduces the short delta of the stock. Tony and Katie decide to be slightly more neutral, shorting the 35 Put. While this is a capital intensive trade, it allows them a higher max profit than shorting an OTM Call would. The argument COULD be made that you can short an ITM 35 Call and have similar Buying Power Reduction and Max profit, but typically tastylive does not sell in the money options naked. All in all, Tony emphasizes the importance that several strategies can allow you to have a similar outcome, and that your trading permissions do not necessarily limit what you can do in your account.
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