What are the pros and cons of a "long stock, short call" position compared to a "short put"? The profit-loss diagram for the &quot;long stock, short call&quot; position and the &quot;short put&quot; position are almost exactly the same, except that for the former, you may be able to profit more when the stock goes up as, in addition to the premium collected from selling the option, you also get to profit from capital gains and dividends from ownership of the stock. Additionally, you are able to allow for a greater decrease in the stock price before you start incurring a loss. However, to take two positions, there may be more transaction costs compared to just taking a &quot;short put&quot; alone. Are there any other pros and cons that I have not considered?
The primary consideration in practice is that the initial investment is larger if you are long the stock, and thus consumes more balance sheet.
The next consideration is that if you don’t hold to maturity, the implied volatility exposure is opposite (and the associated greeks) for the positions.
After that, there are only voting rights, jurisdiction-dependent tax issues, and the reality that one instrument might be mis-priced.