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Suppose that you wish to buy stock and protect yourself against a downside movement in its price. You consider both writing a covered call and
Suppose that you wish to buy stock and protect yourself against a downside movement in its price. You consider both writing a covered call and buying a protective put.
Briefly explain the differences between these two positions.
What gains can you achieve from these positions?
What are the costs you have to pay to have those gains?
What factors would affect your decision?
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