When an investor buys a share of stock, they will gain from this position if the share price increases
and lose if the share price decreases. However, a written call position will result in a gain if the share price
decreases, while it will result in a loss if the share price increases. us, the pay-o from a portfolio of
shares and a written call depends on which of the gains dominates. If the gain from the option is more
than the loss from the stock when the stock price decreases or if the gain from the stock is more than the
loss from the option when the stock price increases, the hedge position will ...
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