Chapter 5 Major Learning Points
In this chapter we’ve learned about Synthetic Calls and Covered Calls. Let’s compare the two strategies:
| ||Synthetic Call||Covered Call|
|Outlook||Bullish, although you are insuring your stock purchase.||Mildly bullish. You expect a steady rise.|
To buy a stock for the medium or long term with the aim of underwriting your downside in the meantime.
If the stock price rises more than the cost of the bought put option, you will make profit.
If the stock falls, you will lose money, but your losses will be capped ...