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Politics : Ask Michael Burke
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To: Knighty Tin who wrote (67618)9/13/1999 12:43:00 PM
From: Don Lloyd  Read Replies (2) of 132070
 
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(...Another point: why mess with the stock and have a useless third leg? Buying stock and selling a call is basically shorting a put and holding cash. So, the author could accomplish the same think much cheaper, with less commissions, less friction and slightly less risk by selling one cash secured put and one naked put. Why did I use the stock in the straddle I mentioned? I had had it put into my portfolio from a previous credit bull spread. Otherwise, I would never do such an inefficient trade.)

Not that you're wrong, but these days stock often has both lower commissions and spreads than options. In addition, stock will have to be re-purchased only half the time on average (for month to month writes), when it is called away. Also, calls usually have a larger time value to decay than puts.

Regards, Don
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