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Strategies & Market Trends : Options for Newbies -(Help Me Obi-Wan-Kenobe)
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To: Mathemagician who wrote (2074)6/11/2001 12:57:57 AM
From: Howard R. Hansen  Read Replies (2) of 2241
 
Why not maintain the required equity in cash? I have yet to hear a good reason why the requirement that an account in which naked puts are written be a margin account.

I hope we are talking about the same thing. By a naked put I mean writing a put in an account in which there is insufficient cash in the account to buy an assigned stock. By a covered put I mean writing a put in an account in which there always will be sufficient cash to buy an assigned stock during the life of the put. Hence when you say "Why not maintain the required equity in cash?" you are saying you want to use the account to write covered puts. Yes, some brokers will let you do this in a non-margin account. But the only way a broker will let you write a put in an account in which there is insufficient cash in the account to buy an assigned stock is in a margin account. This is the same as saying you must use a margin account to write naked puts.
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