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Sunday, 28 January 2007 |
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Puts and calls can work well together. A put can be used to hedge or lock in a profit on a call, and vice versa. If an investor has a put and a call in the same market and the market drops, the put is exercised in order to protect the call’s profit. It is far more important that the put does not interfere with the call’s ability to further profit from a continuation of a bull move. The cost of this protection, without jeopardizing future profits, is still only the premium cost, commission, and fees. |
