Josh Stern

Riding the Bull by Writing Puts on Large-Caps - Barron's

The writing puts strategy makes sense only in the following situation: 1) you want to own the stock anyway, 2) your are short term neutral on the outlook for the stock or the market, and 3) you think current implied volatility on the options is too high. If the amount of shares you are writing puts on is equal to the number you would otherwise buy, then the strategy isn't really any riskier than a long position - you can always buy the put back just as you could always sell the long and the maximum possible loss is the same.

What I find embarrasing is the idea that a fund manager would mention this in Barron's as their strongest investment idea. In that case, they should really think about returning their cash to their shareholders.