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Strategies & Market Trends : How To Write Covered Calls - An Ongoing Real Case Study!
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To: Herm who wrote (10801)5/15/1999 11:08:00 PM
From: Roman S.  Read Replies (4) of 14162
 
Even though the thread is dedicated to covered call writing, I have a couple questions that I hope to be answered.

1) In the case of selling naked puts, is it logical to assume the brokerage would require that you have enough cash in your account to cover the purchase of the stock just in case it was 'put' to you?

I have a conviction that a stock (cheap) will be moving up, and thinking about writing some naked puts and at the same time buying calls at the same strike price and for the same expiration.

2) So at the worst, my calls purchased would expire worthless and stock which I probably wouldn't mind owning at that point and the stock would be 'put' to me or may even not be put to me, but still have the premiums from the puts written in the first place.

3) Ideal scenario is that the puts expire worthless for someone as the price of the underlying security moves the calls 'into the money', thereby getting those premiums in hand for the puts and cashing in on the calls hopefully towards the high end before expiration. This give me the most bang for my buck if I am correct in assessing the future of this move. Correct?

Thank you for your time in advance.
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