Copyright 2022
Arrow Publications


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      Writing “uncovered” (also sometimes referred to as “naked”)  put and call option “combinations” (the simultaneous writing, or sale, of put and call options where shares are not owned by the investor at the time of the transaction) can present a very attractive opportunity for option investors in taxable accounts (uncovered writing is generally not offered for retirement accounts). For the option investor, the simultaneous writing of a put and a call on the same security can provide, as we will see, a two-fold steady stream of income utilizing the same margin requirement if structured properly. It can also provide a chance to purchase shares of stock at a lower than current market price, if that is an investor’s objective. This book will give you the theoretical and practical tools necessary to develop and implement an investment strategy that will provide the opportunity to achieve significant investment returns through writing uncovered put and call combinations on individual stocks and Exchange Traded Funds (ETFs). 
This book is for investors who are proficient in covered call writing (shares are owned to back the option transaction) and who have preferably also engaged in uncovered put writing (where shares are not owned, but the transaction is supported by a margin requirement). With exposure to these investment disciplines an investor would be in a position to determine whether his or her knowledge, experience and appetite for risk is sufficient to consider taking the leap into writing uncovered combinations. 
This is a big leap. Combination option writing is not by any means new, but it is new to almost all individual investors. While it offers the opportunity to significantly increase investment returns, it clearly also increases risk of loss, even if the option writer takes the disciplined approach described in this book.
Unlike covered call writing and put writing (if utilized under similar risk/reward characteristics as covered call writing), an uncovered combination writer may need to stay in frequent or under some circumstances constant touch with the market. As a combination writer, you would likely not want to take a trip for several days unless you were able to check in with your broker, either by computer or on the phone. And, depending on how your uncovered short positions are doing, there are even times when you would not be comfortable being away from the market long enough to play a round of golf! This is not because you are necessarily doing frequent trading. It is because of the need for quick action to close out a position to mitigate losses if it moves against you beyond your pre-defined parameters.
Writing uncovered combinations is probably not a manageable investment strategy for an investor who has a full-time job that would preclude the ability to check on the market from time to time. And in circumstances where action is necessary, you must have the ability to drop everything and devote your full attention to your option positions.
For investors who have time to watch the market, who have the comfort that comes from knowledge and experience with other option writing strategies, and fully understand and are prepared to take additional risk, writing uncovered option combinations offers the opportunity for very high returns at a time when the overall long-term outlook for investment returns, both equity and fixed income, seems to be at very low tide.
We have always been taught that if an investment opportunity offers greater returns, it must correspondingly carry with it greater risks. That is most certainly true of the investment opportunity on which this book is based. For that reason, much attention will be devoted to detailing the risks that are involved so that you, the reader, can make an informed decision whether this strategy is in alignment with your willingness to assume greater risk. The book offers a program with numerous opportunities to mitigate that risk. A discussion of technical analysis also offers tools that can help control risk and enhance investment returns. If you make an informed decision to proceed and use a consistent plan to limit risk, the opportunities for very sizeable investment returns abound.
Be sure you are informed, proceed cautiously (practicing uncovered option writing combinations before doing actual trading is easy to do and builds confidence), and try out the program offered in this book.