The message you're trying to access has been removed from the boards.
The most likely reason for this is that the message violated our Fool's Rules about appropriate content.
Either that or it was swallowed up by intergalactic space beasts from the planet Xeenu.
Please check out The Motley Fool's Terms and Conditions of Service.
Pro recommended writing covered calls on JNJ, why not write synthetic covered calls. The risk seems to be the same, but the capital invested is much less. Hmmm …..I have no idea what Pro does or doesn't suggest. But I find your 'seems to be the same' statement a bit odd. A synthetic covered call (naked put) should have the same 'probability of profit and loss' as a covered call. But one employs 'capital you have' (covered) and the other 'capital you don't have' (naked). That is really the difference between risk and probability, i.e. the 'effect of the outcome' vs the 'likelihood of the outcome'. If you have the capital, just idle (uninvested), the risk isn't much different I guess, but … then the capital requirement is the same.
If you're looking for a lower capital way to do covered calls you can do what's know as the "poor man's covered call" where you use a long LEAP as a substitute for owning shares. That's also known as a diagonal spread, or a LEAP covered write, and it has a lower capital requirement than a straight covered call. But there are several key differences to think about, which are detailed here: https://www.borntosell.com/covered-call-blog/leap-diagonal-s...
Best Of |
Favorites & Replies |
Start a New Board |
My Fool |