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Strategies & Market Trends : Tech Stock Options

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To: Michael Ohlendorf who wrote (58342)	2/24/1999 11:36:00 AM
From: James Joyce	Read Replies (1) of 58727

Michael.. naked writing is ultra high risk. You should avoid it big time unless you have lots of options traing experience, the technical software needed to help, real time data feeds, low comish costs. The chance of exercise is not too high if the otions are very liquid (lots of open interest) as most traders do not exercise but trade the option again. If exercised you would have to buy the stock and then deliver it whcih would be a net wash on capital requirement but might cost you the comish to buy and then the comish to sell to the execisor. Your loss would really be tied to the loss incurred with the naked write. It is essential in a naked position to be right on top of any moves the underlying might make so you can react QUICKLY to get out of the position or roll it. I assume that you have studied McMillan IN DETAIL on follow up actions. Good luck James

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