Rolling Up/Over vs Getting Exercised

[BradK]

Sails,

I understand that the risk is the same for a covered call vs naked put (hence the similar prices but I guess what my "gut" factoring in is that I don't mind losing share captial if the stock price goes down as I'll just keep writing calls. But in the nake puts case, I don't feel so good about buying shares to cover the put (once exercised) at the higher price when they have gone down.

That does not make sense Bucket. If you are willing to buy a share to write a covered call over it, why would you not write a naked put? Exactly the same strategy in reverse.

If you are committed enough to buy $100,000 worth, why not just write an ATM put (make some cash), then get exercised and buy it, and then write the covered call against it???

PS. You ain't listening to a certain 'share renting spruiker' are you? Be careful of the numbers you are being quoted.

Brad

 

[BradK]

No need to go naked. Buy a protective put(s) and the position will become a 'bull put credit spread'.

Yup, the cost of 'insuring' yourself so that you can write covered calls from here until kingdom come - or when the put expires, is basically safe. But, the cost of doing the deal might hurt your overall bottom line.

Brad

 

[BradK]

Bucket183


So, why would you feel any differently - your stock position would have the same loss whether you bought the stock originally at that price, or whether your put is assigned at exactly the same price?

My point exactly.