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 : Dell Technologies Inc.
DELL 133.59-1.8%Dec 3 3:59 PM EST
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  
To: Chuzzlewit who wrote (152782)2/1/2000 9:05:00 AM
From: Sr K  Read Replies (4) of 176387
 
Selling naked puts has a substantial margin requirement; selling short and then selling a put (for the same number of shares or fewer), is a covered put and has no margin requirement. Establishing a bullish put spread has a similar margin requirement.

These means of grabbing put premium are not "free", and perhaps that was what Edwarda meant by saying that you were "too early" (a dead cat bounce), or what edamo meant with his comment about ebb and flow. I think he meant the put premiums (and call premiums) expand and contract like ebb and flow and the key to options investing is not the position you want to take, but selling overvalued and buying undervalued options, which means selling only when the premiums have expanded (puts in a stock decline, calls during a rally), and buying only when the premiums have contracted.

Aside from margin requirements other functional unequivalances of naked puts and covered calls include selling a covered call tolls the holding period for long term cap gains treatment, unless the call is a paired call, that is, sold at the time of purchase of the underlying shares; puts and short positions do not have a preferred cap gains holding period. This is not tax advice; consult your tax adviser or tax software.
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