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Strategies & Market Trends : How To Write Covered Calls - An Ongoing Real Case Study!

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To: Greg Higgins who wrote (11332)8/3/1999 12:48:00 PM
From: Night Writer  Read Replies (2) of 14162
 
Greg,
I didn't mean to be condescending. I came to this thread looking for help and to make a contribution. I apologize for any comment appearing to be condescending.

I understand selling the puts at $45 if you want to buy the stock. I don't understand how the buyer hedges by selling the lower puts.

The act of buying the 45 strike puts is a hedge on the stock.
Selling the 40 strike puts now puts the 45 strike buyer at risk.

I don't understand why the 45 strike buyer would do this but I'm willing to learn.

NW
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