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Strategies & Market Trends : You buy a stock. It goes down, now what?
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To: BWAC who wrote (9)7/7/1998 4:43:00 PM
From: VincentTH  Read Replies (1) of 112
 
re: 1. Sell the stock. Replace it with calls at a strike near the new much lower price.

This is the strategy I use the most. However, it should also be
noted that in a taxable account, this results in a Wash Sale, i.e.
we can not claim the loss.

I like to sell 1/2 of my position, and use the $ to buy twice as much
calls, therefore, establish myself for a Recovery Spread for the run-up.
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