I buy calls and then sell calls to hedge. You collect the decay. If I thought the market was going down, I'd buy puts and sell puts. I can collect the decay, and if the market turns against me my "short positions" the sold call or put will increase in price. When the market starts going my way, I cover or buy back my shorts and apply that to the long side. If you buy a call and a put, I usually just hold on to both until I know the market is going my direction. If you had a call and a put and the market goes down, the profit from the put would eventually be greater than the total invested in the call. So I will let the call expire worthless instead of selling, because it might rally back up before expiration.
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Great explanation. Do you have resources or more comments like this? Write more. I must learn.
That's interesting....however, I think it would depend on how far the price fell for the Put to be worth more than the Call, right? (I need to think more on that one.) But I appreciate your other advice as well. I can't believe I never thought of that. Buy puts AND sell puts. That definitely catches my interest. Needless to say, I've only been dabbling in Options for about a year. I wish I had learned more about them 20 years ago. Certainly saves me headaches and stress.