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Strategies & Market Trends : Options
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To: Jill who wrote (3099)2/17/2000 8:34:00 PM
From: steve mamus  Read Replies (2) of 8096
 
Because of margin requirements I didn't sell a zillion. My current margin requirements for my naked pits in my main trading acct is is in the 7 figures. My general philosophy with regard to selling puts:

1. Preserve capital
2. Preserve capital
3. Manage risk
4. Manage risk
5. Generate cash
6. Keep a large cash reserve
7. Close positions when profit > 75%
8. All free cash generated from option profits is being funneled into 2 long term buy and hold accts with about 15-20 core holdings. The list has been expanding alot lately.
9. Spread risk by diversification on options - don't clump the strikes all at the same time or on the same equity. Hard and fast rule now is no more then 100 contracts on any given equity except for extraordinary brief circumstance.
10. Be disciplined and check your margin requirements every day.
11. Leave a nice cushion on the margin requirements- I have had recently multiple communications from all 3 brokerage firms I work with regarding the concentration of positions, selling puts YAWNYAWNYAWN. Raymond James is having a nervous breakdown...when I sold my first option contract I got 3 communications from them in 48 hours despite the fact that I had traded several thousand contracts in the last year.

DoK
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