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Another way to reduce tail risk when selling options is to simply hedge with a protective call/put at a higher or lower strike respectively. Sufficiently far of
by hannofcart 6y ago
Another way to reduce tail risk when selling options is to simply hedge with a protective call/put at a higher or lower strike respectively. Sufficiently far off strikes will have minimal impacts on returns while reducing tail risk.
- scruple 6y agoThese are known as a Poor Man's Covered Calls and Poor Man's Covered Puts.