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re: Newbie question about put options
Posted on 2/13/13 at 8:41 am to OFWHAP
Posted on 2/13/13 at 8:41 am to OFWHAP
quote:
if the calls you've written are in the money come ex-dividend date, the owners of those calls will exercise early and deprive you of your dividend income.
That would be ok as I would set the call option for +5% of the put price, so I would have made 5% when they excercise their call. If the stock stays around(+/-) the put price, I'll go long and take in dividends until it gets to the 5% mark.
Volatility could be a problem but if the price drops too low then I'll just go long with the stock as these are stocks I would own regardless. I will have to have an exit strategy for individual stock situations such as what happened with kodak, GM, MCI, Enron etc. In that case I would just have to cut my losses and move on.
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