If buying stocks make sense then buying call writes make more sense because they are hedged...come on P.
They are equivalent. + stock - call + put = conversion arbitrage. There is no gray area. "Makes more sense" is nonsense. It's algebraic.
Yes but less fees...wait - a put? A put would have unlimited profit potential but a short call is limited to the premium received... 3...2...1..
dump truck, it's the expression "=" conversion arb. Elimination method (-put): stock - call +put(-put) = x - put Stock - call = - put (equivalency) You get confidently ambiguous when you address simple shit you don't understand. They are equivalent so stating "better for hedge" and similar dumb shit isn't helping you.
I am always on the record stating that it's inferior to *simultaneously* buy stock and short a call. It's not going to result in sudden death. It shows that you don't know what you're doing. Sure, maybe you want to trade the shares light against the call. Say you want bimodal delts and you buy 75 shares against a call. I get that hypothetical, but we're talking about 1x1 relationships here. My first gig over senior summer was running and clerking for Shatkin at CBOT. The only question the pit local asked before you were given the job (clerk) was a simple synthetics question. The takeaway here is to understand that you're not qualified to make $20K on the floor.
If I'm selling a call, it's because I know that's the target. So there's no point holding the stock beyond that because it's going to pull back at which point I will buy again and write again... And if I'm wrong I'm hedged. If I'm right, I got the profits on the stock plus the premium... winner winner chicken dinner.
Oh, and the guy (jerry?) at Shatkin asked me to do a point and figure chart by hand (no graph paper).