Archive | 2010

How Good is Your Trade Execution?

I read in your blogs that your preferred underlying IC instrument is RUT. How often do you get good execution prices with RUT spreads? It's hard for me to get the "mid-price". Do you have any suggestions on execution prices?



Hi Keiser,

Short answer: I don't know how good the executions are.  This is primarily due to the fact that I trade options that are not very liquid.  They are low volume options, and I have no comparative data.

Details: My broker (IB) advertises that they achieve excellent fills, and offer evidence.  I choose to believe them.  However, I'm sure it only applies to single option (no spreads) that have a lot of public order flow.  My trades are almost certainly being made with market makers, or some other professional trader, and I can only get a good fill when they are willing to provide it.

I never try to get the midpoint on my credit spreads or iron condors, and I am happy to get 10 cents worse than mid.  I will go as far as 15 or 20 cents worse than midpoint – if I 'need' the spread for risk modification or when I want to exit to reduce risk.  When collecting the profit, I have more patience.

When trading with the market makers, I don't know how we can ever know what they are thinking or how they value the specific trade that we are trying to make. 

Sometimes when selling vega (for example), the market makers are short vega and are willing to pay up to get some positive vega.  When that happens we could get midpoint – or even better – for selling positions with positive vega.

If trading 100-lots, then those market makers are going to have some incentive to examine our orders and look for an appropriate hedge that allows them to take the trade.

When customers trade 1- or 5-lots, then it may not be worthwhile for the MMs to spend any time with our bid or offer.  My guess is that their computers are set with parameters that scan spreads.  In other words, their computers and the algorithms they set, make the trade decisions.  If that is true, we can never judge how good the fill is – but it will never be 'good.'

You could enter the same order with several brokers and see which one delivers the best execution.  I suspect that's a waste of time, but it is research and you may discover a path that saves significant money – if you have the time and patience to make that attempt.

My only useful suggestion is to know just what you are willing to pay (or collect) for the trade and not to go beyond that limit.  I understand that 'knowing' the limit is difficult – especially when we have no idea of the true bid/ask spread for our trade.  One of the serious defects with electronic trading is that customers do not get to see the real (inside) market.  We only see the published markets, and those are useless.

Side opinion:  When we enter bids and offers without a clear view of the real market, then we are becoming de facto market makers.  We lay our cards on the table and others can take or reject our trade. 

Thanks.  Good questions.


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The CBOE PUT Index

How many times have you heard it:

Don't sell naked puts.

Ans especially never sell naked puts in a falling market.

The CBOE S&P 500 PutWrite Index follows a portfolio that ONLY sells naked puts.

From the CBOE website:  "The PUT strategy is designed to sell a sequence of one-month, at-the-money, S&P 500 Index puts and invest cash at one- and three-month Treasury Bill rates. The number of puts sold varies from month to month, but is limited so that the amount held in Treasury Bills can finance the maximum possible loss from final settlement of the SPX puts."

In our terminology, these are cash-secured puts, with every penny collected from the sale of the puts being invested in Treasury Bills.

The results are rather interesing, and I've mentioned this topic previously.


Jason Ungar at Gresham Investment Management, one of the developers of PUT, publishes a monthly update on the perfromance of 'his' index. You may request a copy via the link. He is very pleased at how well his 'baby' performs.


A recent blog post by Don Fishback, 12/07/2010, puts its performance into perspective:

CBOE PUT Index at a New All-Time High

"Wow, did I miss this!  The CBOE’s PUT Index hit a new all-time high on November 4, eclipsing the peak in May 2008.  It has since extended that rally even further.

Who says selling puts is more risky than buying stocks?!

It’s not the put that’s the problem.  It’s the excessive leverage some people use, and not knowing what to do in the unlikely event that something goes wrong that gets put sellers in trouble.

I’ve got no problem with leverage.  It’s just that there can be too much of a good thing.  And you have to have an exit strategy BEFORE you put the trade on."


Don offers the classic and correct warnings: Don't use too much leverage (that means do not sell ten 20-delta puts as a hedge against being short 200 shares of stock). Have an exit strategy planned in advance. Another piece of advice that emphasizes the importance of writing a trade plan.  Don't be stubborn.  It's impossible to win every month when following this strategy.  However, you can be a winner by exercising good judgment when managing risk.

Followers of PUT have no such concerns.  The methodology is written in stone.  Sell the puts and don't do anything prior to expiration.  Those results have been impressive over the years. However, you and I e not managers of an Index fund.  We use our own cash and must pay attention to risk.

As individual traders, we are not married to a single technique.  We can, and should, manage risk.  By keeping risk in line, we may underperform the CBOE S&P 500 PUT index, but we will never incur a humongous loss.  And that's far more important.

And the evidence tells us that selling naked puts isn't so bad after all – to be more specific it has not been so bad for the lifetime of the PUT index.  And that lifeteime began in mid 2007.  It's a very short lifetime, but it did include the massive declines of 2008-2009 and has not only survived, but is trading at new highs.  Nice index.  Thanks JU.

Addendum from Jason Unger: " Just one thing, the CBOE has backtested the PUT to July 1986; and even including the 1987 crash, it outperforms the S&P 500 in just about every metric."




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As expiration nears, how does theta behave?


I am currently on my second round reviewing the greeks, and this time I am going into more depth. As I am putting together my notes I found references that describe time decay for both OTM and ATM positions. To my surprise, the shape of the graphs is different.

The graph that we are all accustomed to seeing shows that time decay accelerates as expiration nears. Most of the theta decay occurs in the last 30 days in which theta is increasing as the remaining time value of the option is decreasing.


When it comes to OTM options, according to the authors, the shape changes significantly. In the last 30 days, decay decelerates and the majority of the decay occurs before the last 30 days. This is the graph of an OTM option and its time decay.


I have been looking at various option series for both stocks and ETFs and I have not been able to confirm this.


If the above statement is true, when trading iron condors, why wouldn't you pick a timeframe for opening the position near 60 days to expiration and probably closing ~30 days before expiration? This would allow the trader to capture a larger portion of the time decay – because OTM positions make up the iron condor.



This is a very thoughtful question and illustrates why spending time trying to understand the things we are taught is such a good idea.  Thank you.

The general view regarding time decay is correct.  Theta accelerates as expiration approaches.  However, we must recognize that some siturations are different.  Let's say that a stock is trading near 79, there's a week left prior to expiration, and the option under consideration is the 80 call.  Surely that option has time value and with that comes time decay – and the option loses value every day.  Just as you anticipate.

However, consider the call option with a 50 strike.  Unless this stock trades with an extreme volatility, the call has already lost all time value (except for a component due to interest rates) and trades with a bid that is below parity. 

Or you can look at the corresponding put (which has the same theta) and see that it doesn't trade and the bid is zero. It has already lost every penny of it's time value.  Its theta is zero.

These are the situations to which your references are referring when stating that time decay decellerates into expiration.  When options move to zero delta and 100 delta, the time decays disappears prior to expiration.

Most traders who are talking about options and their time decay, are not interested in such options (there is nothing of interest for a trader to discuss).  Thus, options such s the 80 call mentioned above (and the corresponding 80 put) have time value, accelerating time decay and an increasing positive gamma.  These options decay according to your first, or 'standard' graph.

FOTM options

There is more to the rate of time decay than the time remaining.  When options are far OTM or deep ITM, things are just different.  Once you understand that situation (as I'm certain you do now), the theta problem goes away. Once an option has only a small time premium remaining, it cannot keep losing value at the same rate – or else it would become worth less than zero.

Iron Condors

Time decay is what makes trading iron condors profitable. Sure it may be good to own the position when time decay is most rapid, but that is not the 60 to 30-day iron condors that you envision.  That would work only when the calls and puts are both quite far OTM.  That means a tiny premium to start the trade.  That's a non-starter for me.

In the real world of condor trading, most options are not that far OTM and have enough time premium to belong in the standard decay group.  When markets behave for premium sellers, the last 30 days are the periods with the most rapid time decay.  For most iron condor traders, that is the ideal situation. However, that's also the period of highest risk – due to negative gamma.  For me, collecting the fastest time decay is not as important as owning a less risky trade.



Peace on Earth.  Liberty for all.  Best wishes for 2011



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Trader’s Mindset Series II. Always Collect Cash

In the first part of this series, I wrote about beginners who ask the wrong questions, such as: 'How much can I expect to earn when trading options?'

This time I'd like to continue on a theme that began yesterday. That theme can be simply stated:

There is a subset of option traders who seldom, if ever, are willing to pay cash.  All  initial trades, all adjustments, all rolls – must be made at a net cost of zero or less.  The only exception occurs when exiting a trade and collecting a profit.

Opening the trade

When selling premium, it's natural to begin by collecting more cash for options sold than you pay for options bought.  And those who sell naked options never think about buying protection or limiting losses – because it cannot be done for free.  The following discussion of this specific trader mindset refers to trading spreads rather than naked options, although the principles are the same.

The opening trade is easy.  The traders wants to collect a cash premium and choose one of a bunch of strategies that enable him/her to do that.

Managing the trade

This part is more difficult.  If all goes well and time passes, then the option values decrease and may eventually reach a point that our trader is willing to spend a small sum to exit the trade.  However, it's likely that the position will be held, hoping all options expire worthless.  Paying a few nickels to exit a trade and eliminate all future risk is not a popular idea.

One of the problems with this mindset occurs when the market does not behave in a manner that is friendly towards our trader's position.  Premium selling and negative gamma are close relatives.  When the market goes against  a position, further moves increase the rate at which losses increase and the position becomes more dangerous.

Traders with a more normal mindset: "This position requires an adjustment because my current risk is too high and I must avoid a large loss" have no trouble making good trades that reduce risk.  Most of the time these trade involve spending cash.

  • Reduce size and buy back some of the position
  • Buy single options for protection
  • Buy debit spreads for protection
  • Buy…

The strategy tends to be to buy something and spend cash.

However, the trader with the mindset under discussion: "I don't want to pay cash for any option trades.  I do want to prevent large losses, but I will find a way to protect myself with no cash out of pocket" has a more difficult time managing the trade.

Clarification: It's may not seem to be a more difficult time for the trader.  He/she is happy to sell extra premium because it affords an opportunity to make even more money.  However, these traders increase overall risk and do almost nothing to take care of the current problem.

When the market rallies and the position is short too many delta, this trader does recognize the need for making an adjustment.  At those times, the most obvious first choice (for the 'take in cash' traders) is to sell some puts.  That not only adds cash to the coffers, but it adds positive delta.  That's a feel good trade.  However, it's very short-sighted. 

What's wrong with getting some useful positive deltas by selling puts?  Two things.  First, it does almost nothing to reduce the current upside risk. The only upside benefit is to keep most or all of the put premium collected.  However, that cash is not enough to offset the losses that accrue as the market marches higher and negative gamma soon makes the position lose money more quickly that it did before the adjustment.  Second, the position now has risk where none existed – downside risk.  And for what?  For the cash collected to 'protect' the upside.  Selling those puts is not a good idea.

What about rolling?  Surely that's a good risk-reducing technique, says our trader.  Well, 'yes and no' says I.

Rolling works when you move to a good position and exit the risky trade.  However, with cash as the driving force behind the roll, the trader often rolls to a position that is already too risky for an initial trade.  It feels good because it includes extra cash and moves the short options farther out of the money.  As I said that feels comforting.

But it shouldn't.  The new trade is probably so far from neutral that it already requires an adjustment.  That sets up even more risk.  And if the call spread was rolled because of a market rally, and if new puts are sold to balance the new position (turn it into an iron condor), then what about those now FOTM puts from the original iron condor? Prudence dictates paying some price to get those puppies off the street, but our intrepid cash collecting trader does not think that way.  In fact, in his/her mind those have already expired worthless and that, in an of itself, reduces the bath being taken on the call side of the trade.

Then there's the situation when rolling isn't good enough.  It's necessary to pay $6 to buy back the (now ITM) call spread and the most reasonable place to roll (to collect lots of cash) is a spread that trades near $4.  Most credit spread traders do not sell 10-point spreads for $4 when the idea is to watch the options expire worthless.  They are far too close to the money.  But the trader with the cash is king mindset will sell 3 spreads for each two bought.  That allows him/her to roll the position at even money (buy 2 at $6; sell 3 @ $4). 

Immediate risk is gone and the shorts are no longer ITM.  However, this is a very short delta position, had a potential loss that is 50% greater than the original, and is likely to create additional problems.  Rolling for a cash credit may feel nice, it may make the trader falsely believes that no loss has been taken and that there is still a good chance to collect the entire premium – but it's a hollow belief.  The truth is that risk has increased.  That is not the path to survival as a trader.


This is the easy part for most traders.  Take the profit and move on.  To the cash is king trader, buying in cheap options is a waste of money and the trader believes that options were made to expire worthless.  Another misconception and dangerous belief.

If the mindset described fits you, please at least think about modifying the way you think about trading options – to something more reasonable.



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Premium Selling in Low IV Environments

I've received a few questions about selling option premium when IV is low.  This is one example:


For approximately 1 month stocks have gone up without the volatility that we had become accustomed to in the fall.  At the same time the vix has gone down to approximately 16.

It pays to look at the multi-year picture to get a better feel for what can happen to implied volatility.  We are indeed below long-term averages at this level, but as recently as Jan 2007, VIX was 10.  The point is that we may look back at these IV levels and think of them as being relatively high. I have no idea which way IV will be trending in the coming months.

I usually sell option premium and with such low implied volatility on individual stocks, it has become very difficult to sell premium without being exposed to higher touching or expiring risk to get the same premium.

Those last four words describe the problem.  Whether you are trading credit spreads, iron condors, or even selling naked options, the decision on which options to trade MUST be based on something other than option premium.  Premium is one of the important consideations, but allowing that to be the one and only factor is a big mistake, in my opinion.

I urge you to think seriously about collecting the same premium when that involves taking greater risk.

When IV is low, it's low.  You must accept that fact and adapt your trading habits.  If you want approximately the same level of risk as your previous trading, then there is no alternative: you must accept a reduced premium.

Taking on more risk is always wrong – unless the extra reward more than compensates.  If you must take more risk, trade smaller size.  You are dealing with statistics. Unlikely events will occur at random times.  If you do not trade as if that fact were the gospel, then you must get rich quickly (and then retire from trading) because you have almost no chance of surviving over the longer term.

Positions that originate when already outside your comfort zone have too much probability of not working.  You may not like my answers, but I implore you: 'Please' do not take more risk just because the markets have not been volatile. 

This is a different market, and perhaps a different strategy should be used during these times.  Positive gamma can be added to your premium selling portfolio, but that would cost some cash, and your note tells me that spending money for any options is not something you are anxious to do.

In your webinar (at Trade King, on debit spreads) you discussed how the debit spread was very similar to the credit spread with a small advantage to the credit spread as you can do whatever you want with the cash.

In times of low volatility such as this holiday season how does it impact the strategies?  Selling credit spreads with such low volatility is very likely to result in problems with vega increasing faster than theta decay making it an unattractive strategy.  

More than similar, it's equivalent when the trades are initiated at equivalent prices, using the same strike prices and expiration dates.

You have drawn incorrect conclusions: It's not 'low volatility' that is 'very' likely to result in problems.  It's your personal need to collect the same premium.  You are increasing substantially the probability that those 'problems' will arise.  It is not mandatory to do that.

Remember that premiums are smaller for a good reason.  The market has not been volatile and thus, the expectation is that low volatility will continue. In fact, the market has been less volatile than predicted by VIX, and that's one reason VIX is still trending lower. 

You could be happy with a non-volatile market.  You could look at it as a less-risky situation.  Yes, it offers less profit potential per spread, but it also increases the probability of earning a profit.  What's so wrong with that?  You may prefer the higher risk/higher reward scenario, but that is not what this market is offering.  You have chosen the higher risk/SAME reward strategy.  Surely you must understand that this may work for you, but it is not wise and it fights those statistics mentioned earlier.

One reasonable solution is to alter your methods.  My solution to these 'IV is too low' situations may not suit you, but I try to own positions with less negative vega.  Thus, if I trade iron condors (I do), then I may add some OTM call and put spreads – just to add positive vega and gamma.  That reduces risk. But be sure to add positions that reduce risk, and do not add to it.

Or I may add diagonal or double diagonal spreads to an iron condor portfolio, making it more vega neutral.  You may decide to go long vega – if you expect that IV will increase quickly.  There are alternatives to your chosen methods.

More often I do not sell credit spreads but sell uncovered options further out of the money and this too is very unattractive with low volatility.

This is a strategy with higher risk.  I have nothing extra to say about this except that moving strikes nearer to the stock price is not the way to go. 

Another possibility for careful traders is to sit on the sidelines until finding something comfortable to trade.  You are not forced to trade right now.  As a compromise, trade one half as many contracts as you do now.

We must be prepared to modify our strategies when market conditions make those strategies less comfortable to use.  Flexibility – not increased risk – is the way to prosper.

Please explain your spread strategy preferences pro and con for very low volatility. 

This is more of a 'lesson' than a quesion, and I respond to questions such as this in the comments area (nor via e-mail.

Answer: I trade iron condors in smaller size – i.e., I trade fewer spreads and just accept that I'll try to make less money.  If you are successful, if you are making money, then it has to be okay to earn less when you feel risk is too high.   I also consider owning a portfolio that is far less vega negative.  I also consider buying insurance (naked strangle)

And please explain your spread strategy preferences pro and con for very high volatility.

Again, this reply required a book chapter, and I cannot go into detail here.

Answer: As an iron condor trader, or credit spread seller, I go farther OTM when IV is high.  I do not go after the higher premium.  I anticipate more volatility and move farther OTM to accept the same, or even less credit.  I like being farther OTM and will take 10% less premium to move another strike OTM.  I trade negative vega strategies and  recognize that some months afford larger profit opportunities than others.

For spreads one is always buying and selling volatility.  For deep in the money there is little impact for volatility as there is no time premium, but in most other circumstances one option is being sold and one is being bought and it seems to me that a change in volatility will have in general a similar impact on spreads of nearby strikes.

Similar, yes.  Nearby strikes and DITM strikes, yes.  But when selling OTM spreads, there is enough difference that the spread widens as IV increases.  This is more obvious with put spreads, where the skew curve plays a larger role.

There is no best answer to this situation and there is no set of rules to follow.  There is only good judgment and risk management. 

There is a lot of hit and miss when trading – it is not an exact science.  I suggest avoiding extra risk, even when that means trading less size.  I advise accepting smaller premiums, and maybe taking a trading break.  However, there are appropriate alternative strategies when you believe IV is moving higher. When it is low and you don't know where it is headed, it seems to me that vega neutral trading is the safest path. I know safety is not your current concern.  It's not too late to reconsider.


If you are interested in writing an article for ExpiringMonthly:The Option Traders Journal, send an e-mail to me at: mark (at) expiringmonthly (dot) com with a proposal for an article.  This is not a contest and there is no guarantee any ideas will be accepted.  Nor is here a limit on how many may be accepted.  Any topic relating to options meets the initial conditions for acceptance. More detials available.  Just ask.

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Holiday Greetings


I wish everyone a joyous Christmas holiday.  May each of you find 2011 to be prosperous, healthy, and filled with the good things in life.


I'll be back Monday

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What other bloggers are saying

New Volatility Products

Bill Luby, of VIX and More, responding to my question:

Volatility has become a quagmire of products. I like your idea of taking advantage of opportunities that you see, but I don't have the time or patience to dip a toe into this pool. Is that a big mistake?

"I am a strong proponent of only trading what you are comfortable with and know the intricacies of. Unfortunately, these VIX-based ETPs require a fair amount of study to sort out how and when they should be applied. So in the generic sense, I'd say these are not essential products to the random investor.

Ultimately I think the VIX ETNs are going to be best utilized by short-term traders making speculative plays. They also have a place in the portfolios of investors who are looking to hedge their holdings against volatility. Now that a new generation of products are being unveiled, I think the potential for pairs trades in this space has just increased exponentially. I'm not sure how much I am going to get into this, but the opportunities here for the serious and determined student of volatility ETPs are very substantial, IMHO."


Leveraged ETFs

Jared Woodard of CondorOptions on leveraged ETFs:

"When leveraged and inverse ETFs were first launched, many investors weren’t aware of the negative effects that daily rebalancing would have on the long-term performance of those ETFs relative to their benchmarks. Those potential problems are now more widely known, and coverage of leveraged and inverse products often includes the advice that they are best used as trading vehicles rather than investment products…

There’s a larger point to be made here: the complexity of modern financial products clearly outstrips the ability of investors to understand them, even when relatively “sophisticated” (e.g. the kinds of people willing and able to trade inverse/leveraged products) and are presented with proper disclosures."

Jared quotes research suggesting that the message still hasn’t gotten through:

"We find that many investors hold their leveraged ETFs for very long periods, at times longer than three months. Further, we calculate the shortfall of such a behavior compared to creating the leverage in a margin account, is that some ETF investors lose up to 3% of their original investment in just a few weeks, the equivalent of a 50% annualized return. This indicates that investors do not fully understand the risks associated with inappropriately using leveraged and inverse ETFs as long-term investments."

MDW: I recognize that option strategies are attractive when owning ETFs.  Please don't own leveraged ETFs.


Technical Analysis

I don't use TA, but this advice from SMB Training is priceless:  [hat tip Derek]

"Don’t trust what you read or what you have been taught.  You have the same information that the authors did (price data: raw numbers and charts) and two eyes!  You can, and must, do the research for yourself.  Look at 500 examples of support levels on all timeframes and draw your own conclusions.  What you verify, and what you learn, from this process will be so much more useful to you than what you read in a book."

The age of viral information by Rick Bookstaber

"Information is moving from being the bedrock of market efficiency to a source of crisis…

The greatest concern lies in inconsequential information going viral. For those in the market who are on top of the news and its implications, the question no longer is simply one of when others will finally get around to looking at the information and see that it is important. It is also a question of whether something irrelevant will catch the fancy of the crowd…

The new, viral world means more surprises and more volatility; and not because of market shocks precipitated by content, but because of the randomness in what might happen to catch on and reverberate through the internet."


The Insanity of Bailouts: Barry Ritholtz offers this (The full post contains much more):

"What is more important than survival?  On planet Earth, nothing. The most basic rule of life is SURVIVE.

Entities that are maladaptive — corporations, nonprofits, governments — eventually succumb to their own mortality and collapse. This is as it should be.

This is especially true when it comes to financial firms — banks, insurers, investment houses — whose prime responsibility is identifying potential reward and managing risk. The failure of survival raises a compelling question: Why should firms that fail their most basic charge — survival — be bailed out? If on their own they are too incompetent to merely continue to exist, what other manner of disasters live within their balance sheets, legal obligations, managerial skill sets?

A firm that is so reckless and irresponsible as to have put its own survival at risk is not only maladaptive — it has failed its most basic duty."


Merry Christmas to all

Happy New Year!


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Put selling: Adding to a Losing Position

Hi Mark,

I am inspired by your 'Rookies Guide to Options', I love this book. You are teaching in this book about selling CSP [cash-secured puts] in anticipation to buy stock at desired price, lowering your effective cost.

I have a question regarding this subject, namely selling cash covered puts and covered calls.

Let's say that you want to buy a stock you want to own and the price is approaching support level, you sell puts, strike price is close to resistance. Few days later the price dropped below and you are assigned. This is fine.  You own half of what you intended to buy. Unfortunately price keeps falling, you still want to buy additional half of the shares but you also want to lower your price and add options selling to accomplish that.

I understand that you can sell calls on your shares and sell twice the number of puts. Question is: how to manage this trade, at what price to sell calls and puts? At the same time?  At the same price?  Could you please explain this to a rookie?




Hello Robert,

Thank you. Writing cash-secured puts is a worthwhile strategy.  However, there is considerable risk when the market declines.  That's why it's important to adopt this strategy only when willing to accept ownership of the shares.

1) You won't be assigned so quickly. Do not expect to be assigned an exercise notice prior to expiration, unless the put option moves very far ITM. 

Many rookies mistakenly believe that they will be assigned as soon as the option moves through the strike price.  That does not happen.

2) Your plan is to buy more shares and want to buy them at a reduced price by selling more put options.  You also want to write covered calls on the shares just purchased.

You can do just that.  The first thing you must understand about this process is that this is not an exact science. There are choices to be made.  Let's see if I can help.

First, you must understand that you are adding to a losing position if you buy more shares.  For some traders that is something to avoid at all cost. For others, buying more shares – especially when they didn't buy all the shares they want to own – at a lower price has to be a  good deal.  By not buying the full quantity the first time, they are already ahead of the game.
You are obviously in the second group.  I have no quarrel.  Buying more shares is ok – as long as you still want to own them.  Remember this stock has broken support and is falling.  For many traders, once support is broken, they unload the shares and take the loss.
However, let's continue by assuming you have made the decision to try to buy more shares.
3) You have two separate trades to make and neither has anything to do with the other.  You already own stock, and writing covered calls is a priority.  In fact, you should have sold them as soon as you were assigned an exercise notice and owned the shares.  There was no reason to wait.
All you had to do was choose the strike price and the expiration month.  Making that choice requires some serious decision making.  Because I know that you have my book, I suggest taking another look at the chapters on writing covered calls.  They go into all the thought processes that I believe are necessary when making a good decision.  Once you decide on the call to write, go ahead and sell the calls.  It's unfortunate that you waited, and now the stock is lower.  However, that's history.  Decide at what price you are willing to sell the shares and choose an appropriate call.
As an alternative, ignore profit and loss.  Look at the current stock price and pick an option as if you just bought the sahres at the current price.  Pick a good option to write. Don't sell any cheap options – e.g., don't sell options for $0.25.  If you'd be happy to sell stock at the strike and if you are willing to accept the premium, then that's a good call to sell.
4) Buying more stock is another matter.  Decide how much you are willing to pay and sell the appropriate OTM put options.  Example, if the stock is 48 and you want to buy more shares at $44, then choose a put with a $45 strike price and collect at least $1 in premium.  You will either earn that $100 per put option or own the shares at a net cost of $44.
If the puts expire worthless, keep selling new puts – picking the strike price as you did above.  Decide how much you want to pay and find an appropriate put to sell.
5) There is no reason to consider making these trades at the same time.  It's okay if you do that, but why would you want to do that.  When you are ready to sell the calls, enter the order.  When you decide how much to 'bid' for more shares, then enter the order to sell the appropriate puts. These are separate trades requiring separate decisions. 
There is no reason to conside selling the options at the same strike price, same premium, or anything else that you may have meant by 'the same price.' 
Asking at what price to sell the options is asking the impossible.  I'd have to know the stock price, the historical and implied volatility for the stock, how far out (in time) are you willing to sell the options.  I'd also have to know more about your trade plan – i.e., what you hope to accomplish over time.  Recovering losses is not a trade plan.
Keep one piece of advice in mind:  Your goal is to make money in the future.  Is theis the stock that will accomplish that for you?  If you belive the answer is 'yes' then go ahead with your plan.  If the answer is 'no' becasue this stock has fallen so far that you believe this is not the BEST stock to own, then abandon it and invest your money where you think you have a better chance to prosper today, tomorrow and down the line.
Good questions on the practical side of trading options.
My 33 years as an options Trader

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