Tuesday, November 8, 2011

covered call = naked short put

So we've all heard horror stories of people (like Neiderhoffer or Leeson) blowing accounts from selling index puts. So... selling naked index puts: Big Bad Risk.

Then there're guys touting conservatism of writing covered-calls, which is essentially the SAME as writing naked puts.

Amazingly, many brokers have different risk levels that need to be approved before they will allow the use of a certain strategy. Often, the covered call is the first thing brokers will allow a client to trade because it is deemed safe. The sale of a naked put is the last thing that is approved since it is “ultra risky.” Again, huh?
What the heck is wrong with people today?!

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