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Strategies & Market Trends : The Covered Calls for Dummies Thread -- Ignore unavailable to you. Want to Upgrade?

To: Stock Farmer who wrote (1192)	6/24/2001 12:21:08 AM
From: hivemind	Read Replies (1) \| Respond to of 5205

My experience does confirm the equivalence of risk/reward between buy-write and secured-write-put positions. It's important that you confirm this for yourself, though. Also, there is a subtle difference that is purely psychological: Selling puts requires much less actual margin, so it is easier for someone to overcommit. Keep this in mind and always consider the aggregate strike value of all written puts as equivalent to stock already bought. I'd recommend you review the risk-reward profile charts that are commonly available in the better options books. If your plan is to do paper trading to "get the feel" of how it works, that's great, there should never be a rush to try new trades. Having said that, I'm wondering how you'd need to go beyond the basic math required to confirm the equivalence.