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https://boards.fool.com/i-think-the-bear-market-question-has-two-34257977.aspx
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| Subject: Re: IRTC & BEAT Reimbursement News | Date: 7/25/2019 8:15 AM | |
| Author: Oforfive | Number: 115405 of 116965 | |
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I think the bear market question has two components. I don't think that "taking the loss" is one of them. 1) How will the bear market mentality affect the premium. Will the market pay similar % premium as in a bull market? I would expect that there will be less enthusiasm to bet on similar price rise, particularly for 2 to 6 week expirations. 2) By definition we would have less money to buy stocks in order to sell calls. Same number of calls (?) but with lower strike and lower premium (% of stock price). Generally speaking, the strategy will yield less income. At least this seems logical to me. I would guess that a 15% correction would reduce income by.... 20%??? A real bear could result in 50% haircut (less money in the pocket and longer hair on the head as we stretch out visits to the barber). KC |
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