Sunday, May 19, 2013

covered call - one-sided protection

The long covers the short call (when underlier climbs too high). Without the protective long, the call poses an unlimited loss.

However, the short call doesn't protect the long position (when underlier collapses).

I learned this in my own pre-trade analysis.

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New York (Time Square), NY, United States
http://www.linkedin.com/in/tanbin