RE:technicalHow this works buy stock now at 18.3 sell 19 calls against those shares, collect 1.3 per share
Sell dec 16 puts at .7 ( requires cash margin in escrow to buy shares at 16 if price drops)
So you collect 2 dollars in premium per share lowering your cost of shares from 18.3 to 16.3.
At expiration date if shares over 19 you have profited 2.7 per share, this is the max pay out.
If it is as low as 16.3 you are still at break even on shares and puts expire worthless .
if it drops to 15 you now have twice the shares but a cost of 16.15 so you are down 1.3 per share but twice the shares ( same as 2.6 on upside with half the shares)
So loss to equal potential gain is at 15 dollars on downside compared to 19 on upside , anything above 16.3 is profit of somekind and sp below 15 is potential for paper losses on the shares you hold after put excercise and original purchase.
It lowers your potential win above 19 but still a good return if price stays above 16.5 and shelters losses all the way down to 16.3