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Non-Tech : Paired Trades and Hedging Strategies
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To: Sam Citron who wrote (35)12/2/2004 4:38:19 PM
From: Biomaven  Read Replies (1) of 136
 
The issue with selling covered calls is that you are capped on the upside but are still exposed on the downside.

Whether or not you are being fairly rewarded for this depends on what the implied volatility of the option you are selling is. If it's high, it usually means there is a substantial chance of a big move in the stock - there's usually no free lunch.

Peter
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