No Free Lunch: Long Calls vs. Married Puts
Tuesday, August 18th, 2009Heh… that’s right, there is no free lunch.
BTW, the reward side is better for a married put than it is for a straight call as well. Check the numbers using my example from the video: If ESRX goes to $85, the $75 call option purchased for $8.30 will now be worth $10.00. That’s a gain of $1.70…On the other hand, the stock only portion (the put will expire worthless) of the married put will be worth $85. Since the married put was purchased for a total investment of $82.35, the dollar amount gain is $2.65! (more…)