Big Dog's Boom Boom Room Message Board

STOCKTALK

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.

Gold/Mining/Energy : Big Dog's Boom Boom Room

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next

To: profile_14 who wrote (86182)	6/12/2007 2:52:06 PM
From: ChanceIs	Read Replies (2) of 206325

>>>I have Level 3, which allows for naked put writing, but I seldom use it.<<< I do business with Schwab as well. I just found out today that you can write "cash covered puts" in a Level 1 account. A cash covered put is basically a naked put except that your broker will have reserved CASH (not room to borrow using margin) to "clothe" the put - i.e. to fund the purchase of the shares with cash at the strike should the put be exercised against you. Basically it restricts the use of all margin borrowing in the account and then some cash for as long as the "cash covered put" exists. I was advised that this will work best in a cash account - obvious. In a margin account, if it bounces online you would have to call a broker and then they would allow it. For spread WRITING Schwab will reserve the full margin requirement for the short leg if the short leg expiry comes after the long leg - e.g. long July calls but short August calls. If you were long the August calls but short the July ones, they would require only the width of the spread to be withheld in cash.

Report TOU Violation

Share This Post

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next