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.

Strategies & Market Trends : Picks of the quarter -- Ignore unavailable to you. Want to Upgrade?

To: Bearcatbob who wrote (8934)	1/14/2010 5:09:07 AM
From: Patrick Slevin	3 Recommendations Respond to of 20435

You see from the example how I postured the position so when you ask Do you consider a covered call being short the call? If the call was not covered by shares I would agree. the answer would be yes. What I described was a neutral position. A hedged Long with an offsetting Short. If you prefer to call it a covered call it's perfectly accurate of course. Let's not get bogged down on something that was described and say it's not this but that. The net result is the same, a completely hedged position. As for cash secured puts - do you see any difference in the risk vs holding the shares? Slightly. You suffer on Margin as I recall. But I don't wish to lecture on how positions should be built. I only posted what I said because I thought your approach was different than what you think. Had I known your real intent I would not have said anything. -------------------- Here's another hedged position I have on. It addresses your concern of owning the stock. Long MOS June 55 Calls, Short MOS Feb 65 Calls. If MOS moves higher we Buy in the Feb 65s, write the March 70s et cetera and eventually Buy Long dated Puts, converting the June 55 into stock. Or just Close and move on. If MOS goes sideways the June loses less Premium than the Feb and we Close. If MOS craters our loss is limited. In this fashion we have taken out the Risk of owning the Stock. In either of the hedged positions, Stock protected by Puts or simply owning Long dated Calls instead of the stock you will give up the income from the Short Puts and you will spend the Premium for the protection. Your Income stream is lower. On the other hand it's Risk Adverse.