Options for Newbies -(Help Me Obi-Wan-Kenobe) Message Board

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Strategies & Market Trends : Options for Newbies -(Help Me Obi-Wan-Kenobe)

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To: J. P. who wrote (2159)	8/29/2001 12:32:52 AM
From: Dan Duchardt	of 2241

J. P. My margin requirement should be ($5 the strike spread x 100 shares) - ($300 which is my credit) for a total of $200...is this correct? The margin for a spread is usually the full potential liability. In this case $500, the $300 credit plus $200 of your own cash. Do I have to go ahead and purchase 100 shares of XYZ for 55 dollars a share by excercising my option to physically deliver them (or $5500), or do I simply lose my $200 dollar margin requirement? Know your broker! Find out from them exactly how they handle this situation and the fees they will charge. Worst case you should be looking at two transactions, one to buy the stock because you are assigned, and one to sell by exercising your option. Of course you collect $500 less than you pay, so you loose the net $200 too. Dan

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