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Technology Stocks : Cisco Systems, Inc. (CSCO)
CSCO 75.46-3.7%Nov 20 3:59 PM EST
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To: RetiredNow who wrote (74368)11/1/2007 9:46:29 AM
From: Elroy  Read Replies (2) of 77400
 
Based on the way you explained it, it seems like the risk isn't that high either.

If the stock goes up a lot, you lose profits. If the stock goes down a lot, you lose but you lose less than just holding the stock because you keep the call premium. The best case is if the stock just goes nowhere, then you keep the call premium and the underlying doesn't make or lose money.

Selling covered calls isn't that risky. It's selling uncovered calls that is extremely risky since you lose the entire difference between the strike and the final stock price.
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