Ampex Corp: Digital Storage Message Board

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Technology Stocks : Ampex Corp: Digital Storage

AMPX 7.887

+0.7%

Dec 31 3:59 PM EST

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To: Ed who wrote (2485)	4/6/1997 12:50:00 AM
From: HPilot	of 3256

Actually I am not selling naked calls but have a substantial holding of stock. But my broker would let me but not in a IRA account. If the out of money calls are of the same month or later they will take the differance between the strike price to figure the reserve if the spread is naked. I think that may only be if the higher strike price is also in the money though. I don't know the formula but the reserve is less than for selling the in the money calls only. If you are figuring to do this on your regular account I would hold off a while. The backspread is best placed when the price is near the lower sold calls either just in or out of the money and the out of money longer calls are still cheap. This gets you into a better position for downside risk and not a bad position for the upside. If you are thinking that the downside is low enough you could do this with 5's a 7 1/2's right now and be in a better bullish position if you buy as much of the 7 1/2's as you can!. But as I said not as good a downside position but much better than buying the calls only.

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