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since your cost is 27 , you could buy a 25 put. Should be pretty cheap
insurance with price at 30.
Steve
----- Original Message -----
From: "schnakeus" <schnake1@xxxxxxxxxxxx>
To: <realtraders@xxxxxxxxxxxxxxx>
Sent: Wednesday, March 13, 2002 12:30 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.
>
> Steve
>
>
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