Keeping cost base to sell CC after put assignment

[Neel Kaipatur]

Hello

I am trying your options wheel strategy or selling CSP and if assigned selling CC but I want to sell CC at the cost base where the put was assigned. How do I incorporate that in my Strategy

[OptionStack]

Can you elaborate on what you are trying to model?

For instance, let's say you sold a 100 strike put @ $5, and then this put was assigned into long stock.  The cost basis of the assigned stock is ([put strike price - put premium received], $100 - $5 = 95).  Are you trying to sell the 95 strike call?  

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[Neel Kaipatur]

Thanks for your reply. I am trying to sell a call at the strike the put was sold. So at 100$

Does it make sense?

[Neel Kaipatur]

Hi 

I am back testing a bear put spread but it doesn't close when I get 1.5x my risk debit. I have attached the link

https://think.optionstack.net/zs/3/k-BpfzBkkxO694iPUuI3kl1jUscFohKhYYnxLksg6faQqfPG3TCD83fENIF15HSk3U

Thank you

[OptionStack]

Unlike a bull put spread (short put vertical spread), the maximum risk of a bear put spread (long put vertical spread) is the amount of debit / cost basis of the trade.  If you hold the a bear put spread to expiration, you would not lose more than your initial debit. That's why your rule to close at 1.5X debit does NOT trigger, as the max loss is your initial debit / cost basis.     

The material on this website is provided for informational purposes only and does not constitute an offer to sell, a solicitation to buy, or a recommendation or endorsement for any security or strategy, nor does it constitute an offer to provide investment advisory or other services by OptionStack. In addition, the content of the website offers no opinion with respect to the suitability of any security or any specific investment.  There are no guarantees as to accuracy or completeness of the views expressed in the website. The views are subject to change, and may have become unreliable for various reasons, including changes in market conditions or economic circumstances. Past performance is no indication or guarantee of future results. All investments involve risk – including loss of principal. You should consult with an investment professional before making any investment decisions.