SI
SI
discoversearch

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor.  We ask that you disable ad blocking while on Silicon Investor in the best interests of our community.  If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.
Technology Stocks : Qualcomm Incorporated (QCOM)
QCOM 159.59-3.9%Nov 20 3:59 PM EST
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  
To: Jill who wrote (54830)12/18/1999 11:40:00 AM
From: PAL  Read Replies (2) of 152472
 
Hi Jill:

Since you like naked put option, here is some additional scenario:

Decmber options are history. All naked puts options with s/p (strike price) of 450 or lessexpire worthless. There is no bonus to have an option with s/p 200 which is 255 OTM.

What is next? Evaluate your position of naked put options. See wthether you hold positions which are way OTM, and whether you want to exchange them or just sot there and let them expire worthless.

I give you an example to increas the return:

20 puts QCOM Apr250 sold a montn ago, now $ 5. What to do?
a. Hold them until expiry. Chances are 99% they will expire worthless.
b. close the position and take the profit, and pay Uncle Sam his share: Cost $ 10k (plus taxes). Sell 3 QCOM Apr360 puts at 33 1/2 to finance that purchase. This will increase your margin power. Let us calculate the margin requrements for each:

20 Apr250 put at 5. Margin minimum requirements: 10% of 455 + premium = 45 1/2 + 5 = 50 1/2 times 20 contracts = $ 101,000

3 Apr360 put at 33 1/2. Margin minimum requirements: 10% of 455 + premium = 45 1/2 + 33 1/2 = 79 times 3 contracts = $ 23,700

You see that you have increase your margin capacity by $ 77,300 which you can sell more puts.

This strategy can be used if you feel comfortable that QCOM will be higher than 360 (LOL) come April 2000.

Herewith I am introducing:

PAL's LAW :

AT THE CLOSE OF OPTION EXPIRATION DAY, ALL OUT OF THE MONEY OPTIONS ARE JUST THE SAME

Good Luck on your option trading

Paul
Report TOU ViolationShare This Post
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  

HomeMailHotSubjectMarksPeopleMarksKeepersSettings
Terms Of UseContact UsCopyright/IP PolicyPrivacy PolicyAbout UsFAQAdvertise on SI
© 2025 Knight Sac Media.  Data provided by Twelve Data, Alpha Vantage, and CityFALCON News