If the SP is below the strike in 2025, then I just do new CC contracts for 2026 and get the premium for those, minus the new Bull call spread.
Edit: But dl003 doesn't like my plan, so maybe it's not ideal....
I don't disagree with the what, but with the why.
To me, one of the keys to long term success is risk management. To assess risks, we need to understand what we are getting into. Complexity is the obstacle to clarity and so simplicity should be prioritized.
Like I said, you can either +1 400C & -2 420C for $10.5 net credit or you can do just a single -1 450C for the same $10.5 credit.
First, you need to understand that the comparability in roll-ability between 2 strategies can be roughly estimated by looking at what will happen on the expiration date.
On the exp date, if TSLA ends up less than $400, both strategies will yield the same result. You get to keep your share and pocket $10.5 per share.
If TSLA ends up between 400 and 440, your strategy will come out, up to $20, ahead. TSLA needs to land exactly at 420 for you to get the full $20 advantage.
If TSLA ends up over 440, my strategy will come out ahead by $10.
What this tells me is there's very little difference between the 2 strategies in term of risk : reward. So if I'm saying I don't like your plan, it's like I'm saying I don't like my plan either. Do I think selling 450C exp 1/2025 is a bad idea? No, not even remotely true.
What I take issue with is not the what, but the why. It sounded to me you thought this was a good idea because the $20 spread would keep you safe from a face ripper rally. It won't. I'm not disputing the viability of the plan. I'm simply questioning the reason. Do a thought exercise: would you be willing to sell a single 450 CC for each 100s you own, without the "safety" spread? If that thought disturbs you, you might be having a risk assessment issue.
So what I'm saying is keep it simple. If you can get roughly the same risk : reward with a 1 legged strategy, don't go with a 3 legged alternative if you have not thoroughly assessed the risks. The dangerous thing is not to execute the strategy, but to ignore other more important elements such as levels, trends and timing just because you think your strategy is bulletproof.
Here's the scenario: There might come a day, when TSLA crashes again to, says, 130. Feeling the heat and worried you might be out of income for months on ends, you start looking at a 12 MTE 250 CC and to keep yourself "safe", you say let's pair it with a 220/250 call spread.
Despite the chart screaming a bottom is imminent, you execute this plan, thinking "How can I lose? I can always roll." 6 months later, the stock rockets to 350 and now you regret everything.
