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To: cthruu who wrote (1358)	1/20/2000 4:21:00 AM
From: taxman	Read Replies (1) \| Respond to of 8096

true. i'm not considering margin and commissions. also i'm assuming you exit at expiration and do not roll over. regards

To: cthruu who wrote (1358)	1/20/2000 10:08:00 AM
From: taxman	Read Replies (2) \| Respond to of 8096

here is an example. assume investor puts same amount in each play. margin rules, commissions not considered. Xerox stock sells for $61. The Xerox/April/60 call sells for $7 3/8 and the Xerox/April/60 put sells for $3 1/4. The call, put and a Treasury Bill all mature in 4 months. The Treasury Bill price is .9492. Assume that Xerox does not pay dividends in this period. orig stock 60 stock 50 (6,100) (6,000) (5,000) investor a buys xrx at 61 739 0 0 sells call (5,361) (6,000) (5,000) net 325 0 1,000 investor b sells put (5,686) (5,991) (5,991) buys t-bill (5,361) (5,991) (4,991) net ) if stock goes up to 60 or better, each investors account is worth approximately 6,000. if stock goes down, say to 50 each account is worth approximately 5,000. difference of 8 due to spreads, rounding etc. so same approximately same profit or loss whether covered call or naked put. any questions? regards