At the end of the three-month period, the price of Merck stock remained at about $70. The option expired unexercised, and Dr. Brown then wrote (sold) another three-month call option for $600. At the end of the next period, her fears began to be realized. The price of Merck fell to $60, and again the option remained unexercised. Dr. Brown in effect lost $10 per share in the market value of the stock but pocketed the $600 option premium as well as the generous quarterly dividend paid by Merck. Hence, she largely avoided the loss she would have suffered if she had taken no offsetting action in
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