I am starting this thread as a reference for the next time someone says something like Covered Call good, Naked Put bad.
Why? Because they are the same thing, they are synthetic equivalents. If the naked put is horrible and risky, then so is the covered call. If the covered call is conservative and good, then, so is the naked put. Once again because they are the same thing.
Firstly, for those with a more advanced grasp of options:
Supposing we have two traders, one who has a covered call, the other a naked put of the same strike and expiry.
The question is how do you get flat with one trade?
For the naked put it is easy, simply buy a put of the same strike and expiry, ergo closing out the trade.
What about the covered call? How do you get flat with one trade? It is the same, you simply buy a put of the same strike and expiry, making the position a "conversion" which is a flat position.
If you understand options, this should be enough conclusive proof that they are the same, but if still not convinced, lets do a bit of arithmetic....