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Biotech / Medical : Biotech Valuation
CRSP 55.28+5.3%Nov 17 3:59 PM EST
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To: Rocky9 who wrote (13351)10/6/2004 8:14:29 PM
From: Robohogs  Read Replies (1) of 52153
 
The issue with covered call strategies is that one takes all of the downside risk (less the call premium) for only a handful of the upside. It means you have capped your gains at some level and still have 80% or so downside potential. Think if one had done this around Soltara approval on SEPR. Stock got creamed and huge losses would have been made. A counter argument sometimes is that oh well, I can do it again when the option expires. But at what price? Locking in what loss?

Jon
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