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: Mathemagician who wrote (4018)11/1/2002 12:47:58 AM
From: Dan Duchardt  Read Replies (3) of 5205
 
assuming that he plans to initiate and liquidate the stock and call positions simultaneously

An assumption that does not apply to many of the regulars here who hold long term underlying positions and sell calls to generate income rather than entering and exiting buy-write positions every time around. Except for one initial buy and one final sell of the underlying there is no transaction penalty for selling and rolling CCs over selling naked puts. And those who happen to be good market timers can increase their net worth by not trading options at all and simply holding the underlying when the market goes on a run.

I have nothing against selling puts, but it's hard to understand the negative tone of this excerpt regarding CCs when the only advantage of short puts is if you are paying double commissions. That distinction may have been a bigger deal back in the days of full service transaction fees. After all the basic premise is

As we both know, doing a covered call is identical to selling a put

The real advantage of selling puts now, if one chooses to do it, is a reduced cost to carry the position creating the possibility of greater leverage. That is a two edged sword; you can win more or lose more.
Report TOU ViolationShare This Post
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  

HomeMailHotSubjectMarksPeopleMarksKeepersSettings
Terms Of UseContact UsCopyright/IP PolicyPrivacy PolicyAbout UsFAQAdvertise on SI
© 2025 Knight Sac Media.  Data provided by Twelve Data, Alpha Vantage, and CityFALCON News