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Non-Tech : Paired Trades and Hedging Strategies -- Ignore unavailable to you. Want to Upgrade?

To: Sam Citron who wrote (38)	12/3/2004 10:55:34 AM
From: Biomaven	Read Replies (1) \| Respond to of 136

Well by selling a covered call you are effectively selling part of your position. Roughly how much of the position (at this point in time) is given by the delta on the options you sold. So in that sense you are of course reducing your risk some compared with just holding the stock. I'd start from the premise that stocks and options are both fairly priced in general. That means no general rule is going to produce any above-average returns - you can systematically swap risk for return, but that's about it. Peter