Roger's 1998 Short Picks Message Board

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Strategies & Market Trends : Roger's 1998 Short Picks

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To: Brad Davies who wrote (1406)	1/24/1998 3:27:00 AM
From: Bill Wexler	Read Replies (2) of 18691

Correct. If the stock falls below the strike price then your profit is limited to: The short price - the strike price + the option premium. The put also provides some protection against the stock moving against you. It is exactly the same as buying stock and selling out of the money covered calls. Depending on your broker, there may be no additional margin requirement. Most brokers will not require extra margin for writing covered calls against long positions, and some brokers will treat "covered" puts against short positions the same way.

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