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Strategies & Market Trends : The Covered Calls for Dummies Thread
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To: Uncle Frank who wrote (2680)10/14/2001 2:04:25 PM
From: Mathemagician  Read Replies (2) of 5205
 
In fact, though the reward profile for writing puts and writing calls is very similar, the risk with shorting puts is so much larger that Roth defines the appropriate underlying assumption as "bullish to very bullish".

Here we go again... :)

The risk inherent in shorting puts is no larger than the risk of writing covered calls. The positions carry equivalent risk and reward. I thought we had agreed that Roth probably said that for reasons external to the technique, like the fact that it may be easier to overcommit using puts than writing CCs, rather than inherent reasons?

If you disagree, please indulge me with a scenario using a particular stock that illustrates the greater risk in a naked put vs. CC position.

dM
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