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Strategies & Market Trends : How To Write Covered Calls - An Ongoing Real Case Study!
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To: Richard Gibbons who wrote (11911)11/27/1999 11:48:00 AM
From: James F. Hopkins  Read Replies (1) of 14162
 
Almost the equivalent, but there are differences.
The put money gives you some room to cover before losing money
(if the stock doesn't do what you thought) and if it does you
make it plus the drop in price.

I have at times ( not often ) found what's called a "lay up:,
they don't make much and you won't see em often but they do
happen because of supply and demand. It's when you find the
spreads such that you can buy a call with the put money and
at the same time go short, that way if she goes down you win , but
if she goes up you still don't lose. These only show up when
put premos on a stocks puts are rather high and in bigger demand than
the calls. ( they seem to be more trouble finding than they are
worth ) but for academic reasons I think a person needs to
understand them even if they don't bet em, and the only way they
will is to find a few.

As for selling naked calls vs shorting the stock, while it's
generally thought of as more risky that's a fallacy that seems
to get passed around and just hangs on; more often than not it's
less risky as most often the premo gives you room to buy the stock
with a stop loss order before it hits the strike price, at that
point the put's you thought of buying will have gotten cheaper.
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But all the above aside, I'm not suggesting anyone use any of
taht strategy it's just academic, as I feel people need to play what suites them the best &I haven't found any one strategy that fits all
people , personally with options I mostly play bull spreads on
stocks I like, or write covered calls on longer term holdings.
--------------
Jim
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