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Avid Technology, Inc. Message Board

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  • rexobXIP rexobXIP Mar 7, 2003 9:51 AM Flag

    IMPORTANT

    Your assessment is oversimplification -- Read between the lines.

    When I sell calls, they are covered calls -- no unlimited risk. Just (potentially) selling my stock for a higher price than the day I initiated the hedge (and if it is an equity I am planning to hold at the current price). If it goes up -- I make more money than if I just sold. And if it goes down, I close out both positions and temper the downside.

    And why would an options specialist routinely short to offset selling options -- again -- that position opens unlimited risk.

    A shortseller can buy calls to mitigate the risk of the stock rising explosively and cap losses.

 
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