Maybe this question is not ideal for this thread and I don't know how to start a new thread.
Suppose I have a cash portfolio of Rs 5000000 and I want to start writing covered calls or cash puts. I own the stock and I am not worried if my call gets assigned as my cash portfolio would increase to more than my initial cash portfolio though I can't partake on further opportunities of profit. however my main concern is,if the covered call is not assigned and the stock price falls below and I get to keep the stock, but then my cash portfolio which includes the shares is worth less than initial cash portfolio . With the stock I get to rewrite a covered call and then the whole scenario repeats and it dwindles the cash portfolio even more.
How Can it be hedged to protect the portfolio?
Regarding to selling puts , do I get assigned to buy the stock? I won't mind buying the stock at relatively cheaper prices.
from a investor perspective
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Assuming you own a bullish stock. You want to protect the downside ... you buy a put .... you subsidize that selling a call .. you reduce the margin by pledging the stock.
Always you have the risk of your portfolio getting hit till the strike price of the PUT. the tradeoff is limiting the upside potential of the stock for buying protection.
from a trader perspective
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you sell the put and but slight out of money PUT depending on your risk appetite
however there is a better way to participate in the bullish run, which is a PUT ladder ... where you sell a PUT and then buy a PUT below that and then sell another PUT.
the main worry is define BULLISH stock