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Technology Stocks : Cisco Systems, Inc. (CSCO)
CSCO 82.35+1.5%3:58 PM EST
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To: Sr K who wrote (67953)5/21/2005 3:04:04 PM
From: Elroy  Read Replies (1) of 77400
 
a covered call is sold and an "uncovered" call is bought or received. There is a spread depending on liquidity and the factors that go into Black-Scholes. Covered is always lower.

Well, the point is that the call option and whether it is covered are two independent things. If I own CSCO stock and sell an equivalent numbers of CSCO calls, I am covered on the calls. If I don't own CSCO stock and sell the same CSCO calls, I am uncovered on the calls. But the price of the CSCO calls that I sold is the same in either case.

So covered isn't always lower - in fact, whether you are covered or uncovered on your calls, the calls have the same price. The call prices are unrelated to your position in the underlying equity.
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