How To Write Covered Calls - An Ongoing Real Case Study! Message Board

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Strategies & Market Trends : How To Write Covered Calls - An Ongoing Real Case Study!

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To: VincentTH who wrote (6242)	12/29/1997 8:35:00 PM
From: Linda Kaplan	Read Replies (1) of 14162

Vincent, I can answer part of your question. All options require full cash to pay for them at Waterhouse, because of the next day settlement on options. You also have to distinquish between stock buying power and options buying power. Stock buying power is double the cash available. The cash available is the options buying power. You'd have to have had $800 for the Jan 25's and $850 for the Jan 27 1/2's, plus commissions. So you'd have needed $1650 plus commissions. You only had $1,000 if you had that as cash, and not stock buying power, so you were short over $700 for that purchase. I believe all brokers require options to be purchased from cash buying power, not from margin buying power, though some don't ask for payment till it's due (next day), while Waterhouse wants the money in the account at the time you place the order. Linda

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