Is it possible to do CSP Strategy in the TFSA/RRSP account?

The CRA is pretty clear on what types of options may be used in a TSFA, no selling puts! But for people that want to wheel, there is an equivalent to the cash secured put! The CRA allows covered calls on any security, but does not specify that the sold option needs to be OTM. Selling an ITM covered call is equivalent selling a cash secured put.

So let's look at an example. XYZ is trading at $50. You'd like to sell a CSP at $48 at a premium of $1. Your BP if this was done in a margin account is $4700=($48-$1)*100. Instead, you buy the stock at $50 and sell the $48 call receiving $3 in premium. You have outlaid $4700=$5000-$300.

Outcomes: Stock is above $48 at expiry --> You lose the stock @ $48 ($2 loss) but pocket the $3. You net the same $1 as a CSP expired put. Stock is below $48 at expiry --> You own the stock and pocket the premium. $2 of the $3 covers the drop to $48. The end result is the same as a CSP.

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