Rainer,
I agree with your statements regarding the put sale effectively locking you out of upside gains. I think with any strategy there are benefits and drawbacks. Personally, I prefer to hit singles as opposed to swinging for fences and put writes provide a perfect vehicle for that strategy.
But I disagree with your statement of "losses [being comparable]". If you are intimately familiar with the underlying and its overbought/oversold situations, chances of incurring losses are small but the probability of 5-10% roi/month still remain great... I'll take those odds on equities that I don't mind owning.
If you're looking for max gains, put writes are not the way.
tci
p.s. Any thoughts re: return to fundamentals/valuations due to 1. Neg. Barron's article on internets and cash flow, and 2. Blow-up of microstrategy?
It is interesting though that old tech stocks (i.e. dell, aol, etc.) are now considered "safe" plays and have been ramping while "new" tech, whose valuations are based on vision, decline. If one looks at aol from a dcf valuation basis, one can say it certainly is not undervalued, implying some vision is required there as well. But, at least, these stocks are not ridiculously overvalued... |
