I had asked this question in another post but mostly got people responding who didn'tât know what a covered call was and started ranting about margin requirements and naked shorts. So Iâm keeping it real simple this time and just asking people to pick #1 or #2. Actual scenario- GSF breaks above previous resistance at $77 and your strategy is to go long if it hits $78 with a tight stop at $76.50 if the breakout fails. You buy at $78, the breakout does fail and the stock drops to $76.50. Do you: 1.Sell the stock and take a loss or 2.Sell a Jan 09 call with a strike price of $50 at the bid for $28.70. If you selected #1 you are out $150/ lot. If you select #2 and sit on the stock, when Jan.09 comes around and the call is exercised against you, you receive $50/ share to go with the $28.70 per share you received from the call to make this a winning trade of $70/lot This makes a difference of $220/ lot. ( minus $1 and .05 cents / share commission) . Iâm curious to see how other traders look at money management and taking losses, and whether sitting on $7650 worth of stock to save $220 and not take a loss is worth it to them.