We talk about naked option trading; you’ll hear a LOT about this method in the midst of a bull market; and you’ll hear a LOT about naked call trading in the depths of a bear market…but you won’t hear people talk about the risk associated with such a strategy.
We discuss using Leaps (or longer term options) as a substitute for stock when selling covered calls. This can be called calendar spreads or diagonal spreads; sometimes referred to as renting stock. The idea is to control stock for less than its purchase price and sell calls against that asset.