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Technology Stocks : Ascend Communications (ASND)

ASND 210.01

+1.7%

3:59 PM EST

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To: Glenn D. Rudolph who wrote (29314)	1/4/1998 4:09:00 PM
From: James A. Shankland	Read Replies (1) of 61433

[off-topic: options] This strategy is "silly". The covered call is a synthetic naked put. Glenn, while you are (of course) technically correct, I can think of 3 reasons to write covered calls instead of naked puts. I. Call options are often more heavily traded, and hence more liquid. II. I sometimes see a price difference: you seem to get a better deal writing the call. I don't know why this is. (It would also seem to imply that there's money to be made in arbitrage here.) III. I have some stocks that I'm holding long-term, but I'm not above doing occasional short-term trades in covered calls on these stocks. If I'm already holding the stock anyway, it's easier to write a CC than a naked put. I'd certainly appreciate hearing your thoughts on these points.

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