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.

Technology Stocks : Qualcomm Incorporated (QCOM) -- Ignore unavailable to you. Want to Upgrade?

To: Jon Koplik who wrote (14547)	9/3/1998 9:49:00 PM
From: Joseph G.	Read Replies (2) \| Respond to of 152472

<<But, if you ever look at the real world performance of mutual funds (either stock only or bond only) that write call options, they consistently have both lower volatility and lower returns than their sister mutual funds that merely sit on portfolios of stocks or bonds.>> One has to look at returns over a longer time period, that extends beyond the current (former) bull market. In the seventies and early eighties, covered call writing became popular precisely because those doing it achieved better returns. So, the task is to identify the proper conditions for each and every technique. <<When I am confronted with (literally) Nobel prize winning mathematical theory>> Can't agree with this either. (i) There is no Nobel Prize for economics, only so called Nobel Memorial Prize established in 1970 by economists themselves. Has nothing to do with real Nobel Prizes, nor with the Nobel Foundation. (ii) Black-Sholes did not develop any mathematical theory, they just applied "diffusion equation", well known in physics, to option pricing under assumption of a random, specifically, Gaussian distribution in fluctuations of the price of the underlying security. It is well established by now that the empirical distribution is not Gaussian, that model is only an approximation. (iii) BTW, there is no Nobel Prize for mathematics, either.