Being short stock (short call + long put) and being short calls (short call) are not synthetically the same. That was not my point, nor has it been the point of this thread (I think this thread has a point. Then again...). As for the point that "max loss is easy to see in most cases," how exactly can one quantify the max loss of being short a call? If it cannot be quantified, then how can it be "easy to see"?
Man oh man - I almost wish I hadn't started this thread (it's like a Pandora's box). The only reason I posted my question was to get some feedback from real traders about risk of naked versus non-naked positions. On another discussion board I visit, alledged experienced posters (similar in their mindset to Mr. Whitster) keep emphasising the safety (read "limited risk") of naked puts compared to the "unlimited risk" of naked calls. Unfortunately that forum has a lot of newbies who seem to take this sort of simplistic interpretation seriously and thus confuse "limited risk" with "low risk". I think the crux of the matter is that naked puts and naked calls carry with them potential large risk and should not be something engaged in by the options newby - if a trader is uncomfortable selling naked calls then he/she should be equally uncomfortable selling naked puts (unless he/she is an investor like Mr Buffett and building a share portfolio). Thank you all for your responses. ra1
whitster, It's true that if stock plunges to 0 for a very short time before your naked puts expire then you risk is predetermined & limited. But if the time the stock's price goes to 0 is longer then the puts expiration period and you will keep on writing naked puts on this stock year in year out then your naked puts risk become unbounded. Because theoretically this can be done infinitely. I hope it solves the paradox.
Something more personal: It really sucks, that somebody knowing even less than me (which is quite an achievement), is arguing with riskarb on options. I believe I'm not the only one trying to learn something here. When the few people here, who know at least a little bit, make well-meaning statements I listen, just in case. Even if they WERE wrong.