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Thanks to everyone who confirmed that a short Put can be considered the same
as a synthetic covered call. My post was to check terminology as someone who
is way into options was "arguing" that they're not the same. Arithmetically
they can be slightly different in respect to the same stock or underlying as
Farid pointed out.
Some people who responded denigrated short PUTs as "poor performers."
Although I didn't seek that kind of advice or response I believe it's worth
noting for those who may have or accepted such an impression, that short
PUTs imo are a more efficient strategy than a covered call, particularly as
the extrinsic component of the premium disappears considerably one strike
otm.
-----Original Message-----
From: Leslie Walko [mailto:l.walko@xxxxxxxxxxx]
Sent: Thursday, October 24, 2002 6:08 PM
To: cwest
Cc: 'Trading_Systems'; omega-list@xxxxxxxxxx
Subject: Re: options terminology questions
Colin:
The usual terminology of option traders for a short put is "Naked
put".
You need level 3 option approval to write one.
Leslie
p.s. There are plenty of clowns who promote this strategy.
In a study done by Value Line Option Survey, this worked pretty
good
until about 1990. Average annual return on equity was close to
10%.
Since then, it has been a reliable money LOOSER.
Beware of 'free advice'.
cwest wrote:
>
> Given that a synthetic long stock is a long call and a short put (at the
> same strike), and a covered call is long a stock and short a call, is it
> a misnomer to say that a short put is a synthetic covered call?
>
> Thanks in advance
> Colin West
--
Regards,
Leslie Walko
610-688-2442
--
"Life is a tragedy for those who feel, a comedy for those who
think"
Horace Walpole, 4th earl of Orford, in a letter dated about 1770
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