No. of Recommendations: 3
Is there any scenario in which the Put is superior to the buy-write Call?
Buy-write means you're using up your cash to pay for the stock, so you don't get interest on that.
But it does have higher time value, which becomes your income, because the strike you've chosen is closer to the stock price.
Probably the dominant things to consider are (a) how much you really want to own the stock. (b) what's the lowest entry price you'd consider good enough to be a buyer. (c) what's the lowest price you'd be willing to sell. If you can put numbers to those things, it will help a lot in picking the best strategy to achieve it.
I guess (d) is what you thin the most likely price range is for the stock around about the expiration--you'll need to know that to solve for (a). e.g,. I assume book per share will rise around 1.5% to 2.5% per quarter in nominal terms in a typical stretch these days, and that the valuation multiple that is most likely (though far from certain) is maybe in the 1.37-1.45 range.
Personally I tend to favour put writing as my bullish "go to", because I'm likely to want to enter on a price dip. Price dips are usually on days that option premiums are high, and if it's a panic they tend to rise a bit more for puts than for calls. So you simply get more time value.
Jim
