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Technology Stocks : Cisco Systems, Inc. (CSCO) -- Ignore unavailable to you. Want to Upgrade?

To: RetiredNow who wrote (67911)	5/18/2005 10:29:10 AM
From: RetiredNow	Respond to of 77400

BTW everyone, Cisco stock keeps going up. This is starting to look like a trend. :)

To: RetiredNow who wrote (67911)	5/18/2005 10:39:41 AM
From: GVTucker	Read Replies (1) \| Respond to of 77400

mindmeld, RE: But I figured that if you sell a covered call, then you have a greater degree of certainty over how much you could lose. Whereas, if you have an uncovered call, then you less certainty, which translates into more risk, which usually translates into a higher premium. You are correct, but the thing that changes the risk is your ownership of the common stock. The risk inherent in the call option alone hasn't changed, it is your portfolio that has changed. Taken to an even greater extreme, if you were long Cisco common, short a call, and long a put of the same strike and expiration as the call, your position would have ZERO risk. But the risk of the call would still have not changed.