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Frank,

So that's the rationale for the covered call vs. written put.

Mike (SilverHawk) is exactly right. Covered call and written put, provided you are looking at the same strike price and expiration for each, are the exact same thing. This is one of the most fundamental truisms of options trading, and the market essentially requires it to be true. When this behavior (known as put/call parity) breaks down even a little bit, the market quickly closes it since it is an arbitrage situation (read: free money) if it persists for any length of time.

There are differences between written puts and covered calls but they are very subtle and not related to the risk/reward. For example, you might pay less commissions with one or the other, depending on your broker. You might prefer one for tax reasons. You might prefer the way one or the other looks in your account window. You might like to use the free loan known as buying power to write puts that extend your account beyond 100% without paying margin interest. Those are all reasons to prefer one to the other but they don't change your returns or your capital at risk.

There is a good thread on put/call parity over on MFO:
http://boards.fool.com/1321/not-a-good-look-31089233.aspx?so...

Realize there are a few people in that thread who are confused on the topic. To cut to the chase, pay careful attention to Jim Gillies' posts, and ignore any contrary posts. The algebraic explanation of put/call parity is interesting and useful too.

Rob
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