标题: Damn sample II [打印本页] 作者: jcole21 时间: 2011-7-13 13:16 标题: Damn sample II
In Sample II, CFA states that covered calls provide "some" downside protection ....
what the h??
There's an inflow from the premium .. so it kind of give a floor value to the strategy (not zero, but the floor ...)
Anyway they say elsewhere that this strategy is precisely to be used when you think downside risk is limited, NOT when you want to protect from downside risk作者: Valores 时间: 2011-7-13 13:16
I totally agree that it is a horrible question. Technically, he could sell a call option that is very deep in the money for a high premium (thus cashing out on the gain), but rarely would someone do that!作者: bpdulog 时间: 2011-7-13 13:16
Yeah, that question was lame.作者: Unforseen 时间: 2011-7-13 13:16
Covered calls do provide some downside protection. If you sell a call for a premium of $2, then you have downside protection of $2 on the stock that you own.
