The answer every time so far has been YES ! (And, I wish I could dare to do larger quantities, too).
Jon, one possibility (that may or may not be better, depending on Q's price, your broker's margin requirements, and your time horizon) is to enter the put sale as a bull (vertical credit) spread instead. (For example, sell the Q Jan01 300 puts, buy the Jan01 250 puts.) The difference between their two prices right now is $20, which you pocket. The margin requirements are (very roughly, in this example only) half of what a naked put position would be, so you're able to collateralize a larger position than you would with a straight put sale. You've also limited your potential downside risk (not a big concern with Q, I agree).
Again, this may or may not work out better for you. Other possibly even better strategy is to enter the naked put sale alone, watch Q go up, and then make it into a spread to 'kill' the margin requirement. (Example: sell some Jan00 300 puts naked; three weeks later Q has happily gone up 50 points, you now buy the Jan00 290 puts for say, half of what you sold the 300 puts for - your margin requirement is only the difference between the strikes, or $1000/contract. You can then sit on the spread and watch both halves expire worthless, but have freed up almost all of your margin to repeat the exercise.) This has worked well for me this year, and as far as I can tell hedging the spread doesn't have any tax consequences as long as you close out both halves in the same tax year.
cheers,
-Rose- |
