Silicon Investor (SI) -- The First Internet Community

STOCKTALK

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.

Politics : DON'T START THE WAR -- Ignore unavailable to you. Want to Upgrade?

To: LPS5 who wrote (6325)	2/7/2003 3:37:10 PM
From: Lazarus_Long	Read Replies (1) \| Respond to of 25898

Because there's a limiting factor - $0 - to the vol seller's losses. Understand that. Can't lose more than 100%. For the same reason - infinite theoretical upside - but the premium play is more leveraged than going short. How? In reality, the risk could be covered by the broker embargoing cash in your account. You sell the call. You get the premium. And have unlimited upside risk. You short. You get the sale price, which is admittedly many times the premium for a call, but you've still got unlimited upside risk. In practice, "unlimited" isn't really meaningful, since no stock can ever get to $infinity per share. In fact, the broker would close the position once you were 50% or 100% or 200% in the red. Now you can easily cover that much with cash in the account. That's the situation with my account. But they refuse to consider that.