Sunday, July 17, 2011

bull strategy COVERED CALL/BUY WRITE

Example: Buy stock; sell calls
on a share-for-share basis
Market Outlook: Neutral to
slightly bullish
Risk: Limited, but substantial
(risk is from a fall in stock price)
Reward: Limited
Increase in Volatility:
Hurts position
Time Erosion: Helps position
BEP: Starting stock price minus
premium received

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