Replies to post #141 on Maksims Covered Call Options Forum

[inflationista]

the premium offsets the difference between the current pps and the strike.

if it goes over the strike he picks up the shares and locks in profit selling them.

[maksim]

I am risking things if it goes above $4.90. There is one week to go before expiration, CY was $4.90, and I bought the $6 put for $1.10... meaning, I bought the put without paying for any time premium.

VS... in a covered call, we write calls to callect the time premium. So in the put situation, I bought it as if it ended today.

As far as why I went opposide side of the trade in CY... It went up a little too much too fast, the occilators are overbought, RSI is turning down from overbought, and MACD is starting to reverse.

Since I purchased an in the money put... I have more downside protection vs buying at the money, or out of the money.