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Non-Tech : The Critical Investing Workshop -- Ignore unavailable to you. Want to Upgrade?

To: Clappy who wrote (15239)	4/19/2000 11:16:00 PM
From: invictus	Read Replies (3) \| Respond to of 35685

devil's advocate: What if the stock absolutely tanks?... You are not making money if the stock drops 50% in value and you collected 13% on your calls...at that point you can hold it until it comes back or sell it...writing calls way out of the money won't net you much premium unless you go on many months...writing calls at the money after a drop just locks in a loss if it runs up... solution?...what about some added insurance by buying way out of the money puts...you may lose a couple of percent but if the stock crashes, you will pick up some of the hit on the puts...this is called a "collar" EJ