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mouton29

11/14/10 3:31 PM

#108918 RE: jq1234 #108915

<<Compare writing covered call to writing insurance is not a good comparision. Selling put is a better comparision to writing insurance.>>

Selling a covered call and selling an uncovered put are the same. Similarly, shorting a stock and buying a call is the same as buying a put. This fact creates arbitrage possibility and is why the prices of puts and calls are so closely linked -- because one can replicate the other.