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Covered call versus protective put

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Uploaded by on Aug 16, 2010

The covered call is an income strategy, but the protective put is an insurance strategy. Note the y-axis is a plot of position profit, where option profit = option payoff -- option premium.

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  • well explained. thanks a lot.

  • Instead of a protective put (Long stock + long put), why not just buy a call option.

    Doesn't that result in the same payoff diagram? What is the advantage of one alternative versus the other?

  • i don't really understand. if the value of the stock is higher than 20, and your counterparty wishes to exercise the call option... doesn't this mean you are obligated to sell your stock?

    How can there still be positive influence of the share price of the stock, if it no longer is in your possession?

  • Thanks a lot :) ithelps us a lot:) continue this great work:)

  • Thank you!!

  • Your videos are so helpful :) Thank you very much :)

  • Thank you for your contents in youtube. It is very helpful for me to study GARP FRM.

  • Thanks for these. I'm studying Options, Futures and Risk Management and these videos are helping a lot in reinforcing what I've gained from lectures.

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