In this hypothetical exercise, I will use IYR as an exercise to demonstrate the feasibility of a hybrid hedging. Will track the results regularly, including adjustments.
Buy 200 shares of IYR ( currently trade at $ 76.41 ). Total $ 15, 282
Sell to open 4 contracts 9th Nov $77.50 Call at $ 0.89 each. Total $ 356
Buy to open 4 contracts 9th Nov $79 Call at $ 0.36 each. Total $ (-144 )
Buy to open 4 contracts 17th Jan 2020 $79.00 Put at $ 7.65. Total $ (-3060)
Buy to open 2 contracts 9th Nov $73.00 Put at $0.51 each. Total $ (- 102 ).
Sell to open 3 contracts 9th Nov $74.50 Put at $0.78 each. Total $ 234.
The transactions do not include trading fees or account for price friction.
Total credit collected this month is ( 356+234-102-144 = $ 344 )
Goal is to pay for the $ 3060 long term put which in addition to the underlying is a bullish position.
Will update the results on or before November 9th.
Disclosure: I/we have no positions in any stocks mentioned, but may initiate a long position in IYR over the next 72 hours.