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Strategies & Market Trends : MDA - Market Direction Analysis -- Ignore unavailable to you. Want to Upgrade?

To: yu who wrote (26412)	9/20/1999 6:03:00 PM
From: pater tenebrarum	Respond to of 99985

Yu, generally speaking, i'd say that the writers of options tend to make out better than the buyers. however, as you point out, the writing of naked calls involves considerable risks and it is up to each individual to determine how much risk he/she is willing and able to take on. one possibility to lessen the risk is to write a credit spread, involving the concurrent sale and purchase of options at different strikes. the advantage of this strategy is that risk/reward are clearly defined for every possible scenario, unlike the writing of naked calls, which depends on probabilities. regards, hb