Protecting a covered call position

An anchor? Do you know how far a stock will run?

 

No ..... that's why you don't sell calls to go with your long stock position.

 

And you know when it's going to turn down too, right? Or stumble along in consolidation?

Or do you only buy stocks that go up_LOL

 

I understood your post completely. I dont see what the problem is.

 

Nobody gives a shit. Most of your responses were not related to the question. Your personal preference is irrelevant, so get the hell out of my thread.

 

Pekelo, to add a bit,

If you decide to exit your position, put it in as a spread, both the call and the stock together. Most likely the calls have a wide quoted market as they are deep in the money. The spread market should be fairly tight.

 

My responses were to other posts - not yours. Most ET threads get multiple responses and some replies are directed to those responses and may not related to the original question.

My 1st post to your question was:

In short your Covered Call is already protected due to its structure. The long stock protects you from unlimited losses. No other action is needed.

 

If one buys the stock for $100 and has a target sale price of $110 then selling the $110 covered call provides some premium while waiting for the sale order to execute. You're being paid for waiting. If the stock drops, you're also ahead of the guy who was just long the stock.

If you're going to sell the stock at $110, in terms of the covered call sale, it doesn't matter if the stock goes much higher. You're either out at $110 (long stock only) or out at $110 plus the premium. Low premium or not, you're further ahead with the CC.

You may not like covered calls but that doesn't change the benefit of getting paid to wait.

In general, I don't like the R/R of a CC but for the everyday investor with a target exit, they provide some extra bang for the buck (income).

 

To give a real life example, I have a thread on Bitcoin trading with CC and CSP. I went long BTC at 8K and sold the 2 weeks expiry 8K strike calls for $640. BTC did run up to 9K at that point I was fairly sure it would drop back. This is where my original question would have applied.


Eventually after a week I switched to a CSP position, taking a $500 gain caused by the time decay...

 

Owning the stock protects the broker not the investor who bears all of the downside risk. Unlimited losses? Have you seen any stocks go to infinity lately?