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.
Biotech / Medical : Gliatech (GLIA)
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  
To: scaram(o)uche who wrote (612)2/10/1999 11:04:00 PM
From: Biomaven   of 2001
 
Rick,

Writing (=shorting) a put is essentially the same as writing a covered call - i.e. owning the stock and writing a call against it.

You have limited upside (in this example $8), but less risk than owning the stock outright. You only get to keep the full $8 if the stock ends up above $30 - if the stock ends up at $25, you keep $3; at $22 you break even; below that you lose.

There's a basic equation that lets you figure out the equivalences:

Long the stock = buying a call and writing a put

L = +C-P [think + for buying and - for writing (selling) ]

You can just treat this like an algebraic equation, so:

-L = +P-C [shorting the stock = buying a put and writing a call]

and the current example:

-P = L-C [writing a put = buying the stock and writing a call]

Trust me, its easier than immunology <G>.

Peter
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