Neutral, following a period of appreciation
An investor will employ this strategy after accruing unrealized profits from
the underlying shares, and wants to protect these gains with the purchase
of a protective put. At the same time, the investor is willing to sell his
stock at a price higher than the current market price so an out-of-
the-money call contract is written, covered in this case by the
underlying stock.
An investor will employ this strategy after accruing unrealized profits from
the underlying shares, and wants to protect these gains with the purchase
of a protective put. At the same time, the investor is willing to sell his
stock at a price higher than the current market price so an out-of-
the-money call contract is written, covered in this case by the
underlying stock.