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Strategies & Market Trends : The Covered Calls for Dummies Thread

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From: ValueGuy	5/17/2011 8:03:44 AM
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IMHO, a covered call strategy is great as you can generate pretty good income while waiting for your stocks to rise in value. However, one of the things I found out recently is that with some stocks, the potential income you may gain may still be outweighed by unrealised capital losses, for example after a negative earnings report (e.g. NVDA). What are some of the strategies you guys use to protect against such a downturn? IMO, if you buy a put along with the stock that you write a covered call, that will pretty much offset any potential losses one may experience in the future. However, somehow this does not make economic sense, unless one plans to generate as much option income out of one stock as possible?

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