MMG,
Last week, I sold a TRLG Feb 16 25 call +1. Underlying cost is 24. Today the stock soared to 29. I limit my gain to 2 in exchange for cashflow,downside protection. If I only long the stock, my gain would be more than double@5 without the small protection.
I have another short call contract @28 expiring july. If the stock continue to soar, I'll miss those gain. But I am satisfy with the predertermined total gain.
If both buyer and seller do the right thing, it can be a win win situation.