SI
SI
discoversearch

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor.  We ask that you disable ad blocking while on Silicon Investor in the best interests of our community.  If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.
Strategies & Market Trends : The Covered Calls for Dummies Thread
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  
To: FaultLine who wrote (1026)6/11/2001 7:32:57 PM
From: Mathemagician   of 5205
 
It is tempting to agree with you but there is (at least) one significant difference, there is no mechanism when selling a put to obtain return from an upswing in the underlying stock to the strike price. The previously OTM contract is now exercised thus yielding the maximum possible return of premium + (strike - basis) - commission. This run-up to the strike, if it occurs, contributes significantly to the total return on the position.

Symmetrically, there is no way for a CC to protect completely from a downswing in the underlying stock. Since the CC writer can only profit from the first few points of an upswing, the put need only protect against the first few points of a downswing.

dM
Report TOU ViolationShare This Post
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  

HomeMailHotSubjectMarksPeopleMarksKeepersSettings
Terms Of UseContact UsCopyright/IP PolicyPrivacy PolicyAbout UsFAQAdvertise on SI
© 2026 Knight Sac Media.  Data provided by Twelve Data, Alpha Vantage, and CityFALCON News