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Buy back the strike at 32 and sell the next strike lower would be my
guess,
My question is this can you sell covered puts ,,,short the stock and you
sell a put at the next strike down ,,,and with that put you have the obligation
to buy the stock back or cover ?
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----- Original Message -----
<DIV
style="BACKGROUND: #e4e4e4; FONT: 10pt arial; font-color: black">From:
<A title=schnake1@xxxxxxxxxxxx
href="mailto:schnake1@xxxxxxxxxxxx";>schnakeus
To: <A title=realtraders@xxxxxxxxxxxxxxx
href="mailto:realtraders@xxxxxxxxxxxxxxx";>realtraders@xxxxxxxxxxxxxxx
Sent: Wednesday, March 13, 2002 2:30
PM
Subject: [RT] Managing covered call
risk
Some of you were talking about covered calls awhile back.
How do most of you handle downside risk in the stock price? You own 100
shares of XYZ at $30. Say you sell a 32 strike a month out for $3. The
stock stays the same or goes up. You keep the premium because of
deterioration or because it gets called. If it goes down to $27 your'e
even, in theory, although call retains some value til exp. Of course if it
tanks, you lose. What do some of you do to manage the trade? Sell a lower
strike call? Have a GTC stop-sell on the stock, then buy to close? Any
other methodology?Opinions and ideas, Please and
thanks.SteveTo
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