It seems like every day a new list of hot stocks appears. Newspapers, magazines, web pages, newsletters...They all have their favorite stocks. If you're tempted to buy any of those stocks, here's a couple of ways to hedge your purchases so you win no matter what direction the market goes. Although it seems easier to rely on hot picks and the never fail lists, most of these services that provide those lists will not tell you how they were picked. You may get a small description stating that "these are high performing companies that outperformed such and such..." or "these picks are based on strong, high volume, high demand companies..." But what determines a strong company? Who are these people that compile these lists? What happens to you when the "never fail list" fails? Is that service going to cover your losses? Investors who plunged into the market last year and bought based on some of the hot stock lists and predictions came up short at the end of the year...But in many cases they would have made profits if they hedged their investments with equity options. If an investor focuses on in-the-money (ITM) covered call writing, they can collect a high premium for the write and increase their downside protection. Yes, you are giving up potential profits by writing ITM, but you protect yourself for a 5%, 10% possibly even a 15% drop in the underlying stock price. And if the stock moves up and you get assigned at expiration, you can still obtain a profit of at least 2%. Now, that might not seem attractive right off the bat, but it isn't a loss now, is it? If an investor wished to hold the stock but still wanted to collect some capital, they could always write out-of-the-money (OTM) covered calls. With an OTM covered call you collect less premium, but you have a less probability of getting assigned at expiration. You hold the stock, keep the premium from the write as the option expires worthless, and you can repeat the pattern month by month. If the stock does drop against you, you can always roll down your position and hedge the loss you took on the underlying security. The patented SmartSearchXL tool is only available on the PowerOptionsPlus or the PowerOptionsRT subscription levels. The SmartSearchXL allows you to pull up profitable Covered Call transactions based on your own individual parameters. You can see exactly what inputs are used, so you know specifically why these transactions appeared. You are not blinded by undefined 'Hot Stock Picks' or 'Never Fail Lists'. However, if you still wished to use those hot lists, the SmartSearchXL allows you to input your own personal stock lists into the system (see the tipsheet on 'Setting up your own Personal Lists and Settings). In this way you can use the SmartSearchXL to find options transactions that will help protect on losses from those 'Never Fail Lists.'