Options Workshop

The "Almost Poor Man's" Covered Call

Options Workshop

Options involve risk and are not suitable for all investors. Please read Characteristics and Risks of Standardized Options before deciding to invest in options.

James is with Liz and Jenny to deliver the latest research from the team and walk through a study on a typically unused synthetic trade.

They walk through a synthetic covered call position, which replicates long stock and a short call. The main takeaway is the potential return on capital benefits afforded by the synthetic stock position. Synthetic stock requires about 20% of the notional value in capital, where as the long stock requires 50%.

Looking at the historical performance the trades stack up one-for-one, leaning most of the discussion on the benefits and drawbacks of both strategies. Tune in for the full discussion!

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