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 120.60+1.8%Jan 9 3:59 PM EST
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  
To: SecularBull who wrote (153329)2/8/2000 5:49:00 PM
From: Chuzzlewit  Read Replies (3) of 176387
 
#1 You've never heard of a strategy of wanting to get a stock put to you (i.e. buying it at your price, and collecting some premium along the way)?

Sure. I did exactly that with TYC and LGTO when I sold deep in the money puts. But that is a bullish strategy. You want the stock to be above the difference between the striking price and the premium you received -- the higher the better.

His post was a direct comparison between writing puts and buying calls. He stated that buying calls was more of a drain on margin than writing puts.

There may be a language problem here. Selling a put is not the equivalent of buying a call. Selling a put is the exact equivalent of establishing a covered call.

When you buy an option (put or call) the cash paid is decreased from your equity dollar for dollar for the purposes of buying capacity. So if you had $100K in cash, if you bought $100K of options you would have no buying capacity because the options are not marginable. But selling a put is treated differently. Depending on the broker, you add the premium received to your equity, and then treat the striking price as if it were using margin. This is over-simplified, and the calculation varies with the broker and your available margin depends on whether the put is in the money or out of the money.

TTFN,
CTC
Report TOU ViolationShare This Post
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  

HomeMailHotSubjectMarksPeopleMarksKeepersSettings
Terms Of UseContact UsCopyright/IP PolicyPrivacy PolicyAbout UsFAQAdvertise on SI
© 2026 Knight Sac Media.  Data provided by Twelve Data, Alpha Vantage, and CityFALCON News