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Technology Stocks : 3Com Corporation (COMS)
COMS 0.001600.0%Jan 16 9:30 AM EST
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To: Glenn D. Rudolph who wrote (10737)11/23/1997 3:24:00 PM
From: Beachbumm  Read Replies (1) of 45548
 
Glenn, the only problem I have with what you and Quaddad are saying is that you are assuming the investor will simply ride the decline all the way from 75 to 35. Why? The investor could easily buy back the calls he sold at substantial profit and still exit the stock long before it hits 35. I don't think the covered call writer will just fall asleep at the helm. I mean, you're correct about the synthetic put stuff, but there are very different approaches to the investment going on here. The put writer doesn't really want to be put the stock while the covered call writer is comfortable holding the stock and doesn't really want it called away. He's looking for income and making a bet that he is knowledgeable with the range the stock will trade in until expiration.

I think Carmine is somewhat correct that the risks (in the mindsets) of the two different styles are lesser with covered call writing.

Just my humble thought.

Regards,

Beachbumm
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