02-02-2022, 09:24 AM
17 y/o trying to understand how Collateralised PutWrite strategy works practically.
<!-- SC_OFF --><div class="md"><p>Hi all, i am a 17 y/o who isn't trading but is curious about CPW, so if my information and/or financial terminology isn't spot on please forgive me.</p> <p>I have been doing some reading on the strategy and the reports are very sesquipedalian and i cant seem to get a proper grasp on how the strategy actually works. I understand the strategy at a basic level however am not sure how the strategy is practically implemented. If anybody has any experience with using the strategy then i'd love hear how it works.</p> <p>I also don't understand how insurance comes into play. One of the reports i read spoke on how in periods of high implied volatility, uncertain overall market sentiment can result in people wanting to protect their downside in fear of the underlying hitting its strike price. Is the 'insurance/protection' the Treasury bills that are bought at the same price as the underlying asset, or am i miss-understanding/missing something entirely.</p> </div><!-- SC_ON --> submitted by <a href="https://www.reddit.com/user/CrematedNig"> /u/CrematedNig </a> <br/> <span><a href="https://www.reddit.com/r/investing/comments/shs5a4/17_yo_trying_to_understand_how_collateralised/">[link]</a></span> <span><a href="https://www.reddit.com/r/investing/comments/shs5a4/17_yo_trying_to_understand_how_collateralised/">[comments]</a></span>Kind Regards R
<!-- SC_OFF --><div class="md"><p>Hi all, i am a 17 y/o who isn't trading but is curious about CPW, so if my information and/or financial terminology isn't spot on please forgive me.</p> <p>I have been doing some reading on the strategy and the reports are very sesquipedalian and i cant seem to get a proper grasp on how the strategy actually works. I understand the strategy at a basic level however am not sure how the strategy is practically implemented. If anybody has any experience with using the strategy then i'd love hear how it works.</p> <p>I also don't understand how insurance comes into play. One of the reports i read spoke on how in periods of high implied volatility, uncertain overall market sentiment can result in people wanting to protect their downside in fear of the underlying hitting its strike price. Is the 'insurance/protection' the Treasury bills that are bought at the same price as the underlying asset, or am i miss-understanding/missing something entirely.</p> </div><!-- SC_ON --> submitted by <a href="https://www.reddit.com/user/CrematedNig"> /u/CrematedNig </a> <br/> <span><a href="https://www.reddit.com/r/investing/comments/shs5a4/17_yo_trying_to_understand_how_collateralised/">[link]</a></span> <span><a href="https://www.reddit.com/r/investing/comments/shs5a4/17_yo_trying_to_understand_how_collateralised/">[comments]</a></span>Kind Regards R