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: mc who wrote (8188)	8/11/1998 4:08:00 PM
From: VincentTH	Read Replies (1) of 14162

Gary, Who is your broker? At Waterhouse they do the following: Calculate the requirement for the put, and if it is under $25,000 you are required to maintain margin equal to the purchase price. Say you sold 10 naked puts at $20 strike, then the requirement is roughly $10,000 cash or $20,000 in security. You can also get away with a lower margin requirement by establishing a Bull Put Spread, by buying, say, 10 puts with $15 strike price, and thus reduce the margin requirement to roughly ($5000 - cost of the 10 long puts.) For naked puts, there are initial requirements, and maintenance requirements. Message me, and I can send you the formulae for those. (Thru trial and error, I can also calculate the stock purchase power to the dollar for my Waterhouse account.)

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