Subject: Re: Getting complicated
I guess one advantage of buy-writes that's worth noting is that although you have to put out cash, you also don't have to worry about earning interest to fill out your ROI estimates. Interest rates can fall and that can potentially cut into returns quite a bit.

I find the main advantage of put writing is that you haven't actually laid out much cash. If you have written puts with various strikes, expiry dates, and underlying stocks, then you can use the same cash pile to back up more than its face value worth of short puts. I did this for years, and never needed to actually use more than 1/3 of the cash for assignments. Even if you did need more than your pile, you'd merely be in the situation of using a broker loan for a day till you sold the stock you'd been assigned, so the "tail risk" is not particularly bad.

The advantage of the leverage is that you can use pretty low return underlying puts which can be at low likelihood of assignment and/or against very solid securities. A boring portfolio with a pinch of leverage can be a wonderful thing, often better than an unleveraged portfolio against more speculative items.

Of course in this context it's a discussion about an entry on a particular security, meaning the only diversification would be by date, so yes, the "real world" put/call equivalence holds more than usual.

Jim