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Yep, you are understanding what Im doing. I am glad you do not see a serious tax penalty with this type of trading. I think the reason I did not ask about the issue of getting put shares of a company that just went into the toilet was that I had considered it and decided I was going to accept the risk.

This is by no means because I think I can time or outsmart the market or investors who actually know what they are doing, but because I presently have a good income but that will change soon. Due to my age I dont have 40 years of compounding to prepare for my retirement. I have to catch up. I have to take some risk.

The BP fiasco is a perfect example of what you are talking about. I think the only thing I can do to lower my risk while using puts and calls this way is to continue to invest in solid companies and in several different companies at a time, instead of only one or two.

Thanks for your input.
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