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To: Jill who wrote (117564)4/14/1999 5:27:00 PM
From: BGR  Read Replies (1) | Respond to of 176387
 
Jill,

Treat them as two different trades. One has the risk-reward profile of a naked long. The other a more conservative risk-reward portfolio, that of a cash-backed put sale. Together, the average risk-reward portfolio is more conservative than that of a naked long position.

However, selling puts and buying calls at the same strike has the same profile as a naked long initiated at the strike price.

-BGR.