Abstract
The use of long and short calls provides risk reduction if the short side is covered. However, this does not eliminate risk but only shifts from market risk to exercise risk and also limits the income potential of bearish moves. With any short option, your swing trading profit can never be greater than the premium paid for the call.
For there never was yet philosopher / That could endure the toothache patiently.
William Shakespeare, Much Ado About Nothing, 1598–99
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© 2013 Michael C. Thomsett
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Thomsett, M.C. (2013). Strategy # 4: Long/Short-Call Strategy, Ratio Writing on the Short Side. In: Options for Swing Trading. Palgrave Macmillan, New York. https://doi.org/10.1057/9781137344113_14
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DOI: https://doi.org/10.1057/9781137344113_14
Publisher Name: Palgrave Macmillan, New York
Print ISBN: 978-1-137-28256-9
Online ISBN: 978-1-137-34411-3
eBook Packages: Palgrave Economics & Finance CollectionEconomics and Finance (R0)