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Strategies & Market Trends : Options
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To: Tom K. who wrote (7823)5/23/2000 4:15:00 PM
From: Bridge Player  Read Replies (1) of 8096
 
Tom, would you work through for me the margin requirement calculation for selling the 2002 70 puts?

If the return on the spread is a double, then twice the return by selling the puts would be 3 times your money as I understand it, i.e. a gain of 200% as opposed to 100%.

I guess I am mostly interested in seeing exactly how the 200% gain on "invested capital" works as a function of the required margin for the trade. Am I correct in assuming that your calculation includes the 20 month interest accrued on the cash returned from the put sale?

BP
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