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Strategies & Market Trends : The Covered Calls for Dummies Thread

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To: Carl Worth who wrote (4615)	11/22/2006 3:19:11 PM
From: Uncle Frank	Read Replies (1) of 5205

>> they're still termed "naked" because you have no position to mitigate the risk (theoretical only of course in most cases) that the stock could go to zero Owning the stock doesn't mitigate the risk of writing a call should the underlying stock decline to zero. And the premium received for the call would be meaningless as a hedge against such a disaster. There's virtually no difference in the risk profile between writing a call and writing a put... provided the put is backed by cash. uf

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