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To: George Coyne who wrote (17475)5/13/1998 11:55:00 AM
From: Ira Player  Read Replies (1) | Respond to of 25960
 
True, but there is a downside, and it is the same as naked puts on the same no. of shares. You are not covered on the downside in either case.

Except for arbitrage, where a profit is locked in immediately, all positions have a downside. Profitable, risk less investing is the holy grail, unattainable. All you can do is limit your exposure.

Covered call writing lowers your downside risk be lowering your cost basis.

Ira



To: George Coyne who wrote (17475)5/13/1998 4:08:00 PM
From: slipnsip  Respond to of 25960
 
** OT **

But the primary difference when comparing options to long stock positions, is the use of extreme leverage. That leverage comes at a pretty steep price. You can hardly compare the downside risk of owning a stock to the downside of owning options either buying or writing.. Nuff said. Sorry to the rest of the thread..


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