Michael - Interesting question. You are probably correct. I think most people do not "collar" a position for several reasons: When you get into a covered call position, it is because you want income, and because you are neutral to positively biased towards that security. Collaring the position with a protective put means that you are now giving income away, and also that you have suddenly developed a bearish bias. In that case, why not just close the entire covered call position? Further, if you are interested in holding a stock long enough to qualify for the lower long term capital gains tax rate, a protective put will reset your calendar clock to zero in the eyes of the IRS, nullifying any time that you may have held the security thus far. In my mind it is much better to either close out the covered call position, or if you feel that the security will outperform the market on a relative basis, hedge your covered call positions with puts on a relevant market index. Regards, Dom Brunone --- On Mon, 2/8/10, optionsmike <michael@safe-
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