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Strategies & Market Trends : How To Write Covered Calls - An Ongoing Real Case Study!
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To: Herm who wrote (8187)8/11/1998 2:33:00 PM
From: mc  Read Replies (2) of 14162
 
Hello Herm & everyone, I have a question about selling puts. I tried to sell a few puts this morning on a stock. If the puts were to be exercised there was more than enough cash in the account to cover the purchase. My broker told me that it was still considered an uncovered option and that I had to meet certain minimum balance requirements ($25,000) before they would let me do that.

1. Is this really an uncovered position? I didn't think that it was since the potential liability is fixed and cash is in the account to cover it. I understand if it were a call and the liability is theoretically unlimited, but, with a put this is not the case.

2. Has anyone else run into this or do you know of a broker who allows this kind of trading and does not consider it an uncovered position?

Thanks,
Gary
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