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A covered call (e.g. long stock and short call) is the same as a short put position. A short put is a bullish position, but not the same as an outright position (i.e. long stock) since the short put has unlimited risk on the downside, but limited upside potential. Any decent book on options will explain such synthetic positions.
Hope this helps
Andy Dunn wrote:
> I have a friend who is using covered calls.
>
> I am almost positive that I read in one of Schwagers books that he explains that a covered call is mathematically the exact same as an outright position but costs twice as much in comission...I think it was during an interview. Does anyone remember this, and which book it was in and maybe the page? I am trying to help out a friend with the knowledge.
>
> thanks
>
> Andy
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