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Strategies & Market Trends : The Covered Calls for Dummies Thread

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To: FaultLine who wrote (2529)	9/27/2001 3:41:43 PM
From: Andrew N. Cothran	Read Replies (1) of 5205

Faultline: I think I have discovered a "hidden" value of selling covered calls. In the past, when a position that I own declines and declines and declines, I have been panicked into selling, almost right at the bottom, having been worn out watching assets disappear before my very eyes. Since I started hedging by selling covered calls, I have been much more sanguine in the face of decline. In fact, I have discovered that the decline is not nearly so worrisome as before, thus saving me from that sense of panic and desperation, the twin evils of staying too long with a "beloved" stock. Now, since I am hedged with covered calls, I find that my stomach does not churn as much and I sleep a little better. And the hedge keeps me a bit sanguine in the face of declining values. I am not nearly so prone to run with the lemmings into the sea of sorrows. Much better to be able to feed them when the euphoric skies reappear---and they will reappear bye and bye. This technique is much better than trying to protect one's self by buying gold stock or bullion.

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