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YM BioSciences, Inc. Ordinary S Message Board

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  • C78596998785 C78596998785 Jul 11, 2006 9:09 AM Flag

    Over 10,000 Oct 5 Puts traded yesterday

    <<selling (or writing) a covered put means shorting a put against a short stock position.>>

    Your definition was about what I'd have come up with, but there is a significant difference from the covered call... The covered call is against a stock which could go below the strike and become worthless... or rise and the only damage is the potential loss (no out of pocket loss)... The "covered put" is only covered against a short as long as the put remains out of the money... once the issue rises above the strike of the put... the short position becomes a loss to the holder of the short and the put contract that was opened.... so covered put just doesn't hold up from a potential loss perspective... which is the definition of covered in my book... It certainly would apply to $5 puts written against YMI which has an AGE PO of 15...

    Thanks for the input