How does it minimize risk? Upside is capped. Downside is still unlimited. A long put caps the downside risk. You can finance it with a short covered call. Then you would be minimizing risk. Edit: hey geniuses. Learn what happens in a downtrend. A CC position has nearly **all the downside risk of owning a stock. But you cap nearly all of your upside**. So it doesn’t minimize risk, but caps the upside - exactly what I said above. QED. If losing your shares is the “downside” you’re afraid of, then you’re making the same reasoning error as OP. There is a reason why every covered call ETF buys protective puts to actually cap the downside risk - which is also what I said above.

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