S, I'm assuming you mean "selling naked" meaning in this case you are not selling covered calls. I believe you must have the equity to purchase the stock in case you get "assigned", meaning someone has exercised the call option contract you sold, and wants the stock at the contract strike price. As the call writer, you have to deliver the stock, so you are forced to buy the stock at the current market price, and deliver it at the strike price.
Of course, since your broker must give you permission (approval) to be qualified to sell naked calls, your broker will fill you in on the equity requirements before you do that. [edit: I don't think it's a 1 for 1 equity requirement in stock, cash, bonds, etc to the ability to buy the stock if your naked calls are exercised by the buyer, but rather the total open naked put/call options can't exceed a certain % of your total equity portfolio.] |
