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Crooked Covers

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Crooked Covers are when your

short option

ratio is not equal to 1

option

per 100 shares. For example you sell 1 call against 200 shares (a

crooked call),

or 2 puts against 150 short shares (a

crooked put).

These leg pairings would not neutralize each other if the options were to go ITM. This results in visually "crooked" risk profiles.

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Disclaimer: By accessing Food for Theta and its services you agree to be bound by the Terms of Use & User Agreement. The information discussed at Food for Theta is based upon the personal experience, theories, and opinions of the author (De’Shan Perry), and is intended for educational and entertainment purposes only. Neither Food for Theta nor the author, De'Shan Perry, are licensed financial or investment advisors. Nothing posted on Food for Theta is intended to be, nor should it be considered financial or investment advice or a recommendation. It is up to each individual reader to personally assess the merits and accuracy of the information provided on Food for Theta. Food for Theta has no professional affiliation with any financial service or brokerage firm. Food for Theta does not endorse any particular tradable entity, underlying, or security and does not transact trades or facilitate markets. Trading requires financial risk and may not be suitable for everyone. Please consider the information provided in Characteristics and Risks of Standardized Options before deciding to invest with options.

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Crooked Covers

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