From the May 01, 2010 issue of Futures Magazine • Subscribe!

PNL Graphs: Naked put vs. Covered call

The first profit-and-loss (PNL) graph shows the covered call. The second PNL graph demonstrates the covered call when all the offsetting profits and losses between the stock and short call are canceled out. You will notice that the resulting position results in a synthetic short put.

comments powered by Disqus
Check out Futures Magazine - Polls on LockerDome on LockerDome