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Politics : Ask Michael Burke
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To: miklosh who wrote (34405)10/24/1998 2:18:00 AM
From: eabDad  Read Replies (1) of 132070
 
miklosh:

Glad it was of help. In the end, you have two answers to ponder:

(1) Do you want to fundamentally sell the stock?

If yes, then (1a) is there a price you would buy it back? If no, sell the stock. If yes, then a covered call is worthwhile and which month and strike price to write depends on the level you would buy it back and your interest to defer taxes (if that is important to you).

If the answer to (1) is no, but you want to protect yourself against disaster, then buying a put is best. What level and month again depends on your maximum loss from here (like a stop loss), and for how long. Buying puts is like buying insurance. Better levels of protection cost more.

Z
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