In this episode of Wealth Building with Options, Dan Passarelli opens with a hilarious rant about Hulu's "double dipping" business model—charging subscribers AND showing ads—which becomes the perfect metaphor for today's topic: covered strangles and covered straddles. These underused strategies allow options traders to "double dip" by collecting premium from both calls and puts, creating excellent opportunities for wealth builders willing to embrace a more sophisticated approach. Key Takeaways: The Double-Dip Concept Just like Hulu gets paid by subscribers AND advertisers, covered strangles let you collect premium from both selling calls and selling puts You're getting two income streams from a single underlying position, though only one option can be assigned Dan shares a real trade he placed What is a Covered Strangle? A 3-part position: Own 100 shares + sell an out-of-the-money call + sell an out-of-the-money cash-secured put Perfect for long-term value investors: "Buy more if the stock goes lower, sell if it goes higher" Warning: You risk doubling your position (200 shares) if assigned on the put Real-World Example: American Eagle Outfitters (AEO) Stock at $10.96, sold $11 calls for $1.80, sold $9 puts for $1.00 Total premium collected: $2.80 (over 25% of stock price!) Massive profit zone: Stock can trade anywhere from $8.58 to $13.80 and you still win That's nearly a 50% range where the strategy is profitable Why These Strategies Work Theta is King: Time decay works in your favor on both options Range-Bound Stocks: Perfect for "boring, sideways" stocks that stay in wide ranges Long-Term Approach: Often uses LEAPS (6+ months) for maximum time premium collection Covered Strangle vs. Covered Straddle Strangle: Different strikes (out-of-the-money call and put) - more conservative Straddle: Same strike price - more aggressive, always has one option in-the-money Find out what Dan prefers for flexibility and risk management The "Set It and Forget It" Management Style The Thanksgiving Turkey Approach: Check monthly, not daily - let theta do the work Immediate GTC Orders: As soon as filled, Dan places good-til-cancelled orders to buy back  Only Trade on Fundamentals: Don't make changes based on mood - only for significant company news Advanced Techniques Split-Time Strangles: Different expiration dates for calls and puts when legging into positions Ratio Variations: Dan's current trade uses 20 puts vs. 1 call for enhanced income generation Liquidity Requirements: Tight bid/ask spreads essential - this strategy doesn't work with wide markets Critical Success Factors: When to Use This Strategy You genuinely want to own more shares if the stock drops You're comfortable selling your shares if the stock rises significantly The stock has strong support levels and reasonable valuation Options have tight bid/ask spreads and good liquidity Risk Management Understand you're adding risk, not truly "covering" it (Dan calls the name misleading) Be prepared for potential assignment on either side Only use on stocks you'd be happy to double down on Avoid if you think the stock might "explode" higher Why Dan Loves This Strategy "Perfect for value investors" - aligns buying and selling with valuation Excellent for takeover candidates with strong support levels Can generate 25%+ returns in sideways markets Works especially well on lower-priced stocks due to volatility skew The Bottom Line Covered strangles and straddles aren't everyday strategies, but when market conditions align, they can be "freaking amazing." The key is patience, proper stock selection, and treating them like long-term investments rather than short-term trades. Dan's Reality Check: "This is a very, very niche strategy... but for the right set of circumstances, gosh man, this can be really, really amazing." Exclusive Content for Subscribers Paid subscribers get video walk-throughs of P&L diagrams for these complex strategies - essential for vis