It seems like one could play the WINS games, just inverted, on a
stock you like using naked puts. When and if you are assigned, switch over to calls and
keep playing.
(sorry if y'all have already been down this road, I didn't look back very far...)
We have been down this road, H, but it's been a long time. I'm particularly intrigued by Naked PUt selling......mostly since reading what McMillan said about them
If you buy 1000 shares of XYZ at $10, on margin,.....you're spending $10,000....but only $5,000 of your own money. If you sell the 10 strike CC for ...say $1.......you get $1,0000 back....your nut is $9.....and you're only out $4,000 or, $4,500 of your own money....depending on how your brokerage does it......and you're out two commissions
IF however you like XYZ the same way....and sell the $10 Put......if you were to get $1 for it.............your broker would require you to have $5,000 if cash in your margin acct........so you could cover the $10,000 exercise if called away..........So unless you have a better margin arrangement....you're no better off with the Naked Put...except for commissions that is.
that's my understanding......anyone care to correct, or amend it? |
