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: Roman S. who wrote (10807)	5/17/1999 8:31:00 PM
From: Greg Higgins	Read Replies (1) of 14162

Roman S. writes: 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? In a cash account, yes. In a margin account, the brokerage margin policy must be followed. Exchange minimum margin is 20% of stock price less the out of the money amount plus the premium. [ I think I said that right.] thinking about writing some naked puts and at the same time buying calls at the same strike price and for the same expiration. This is called synthetic stock. It has the same profit potential as buying the stock at the strike price. If the stock tanks, you're in exactly the same position you would be in if you had bought the stock directly. If it goes up, ditto. Synthetic stock is interesting in that you can probably get into a position for somewhat less than the 50% margin that a stock purchase would take. It can also let you get in over your head. If you're sure the stock's on its way up, ... On the other hand you could also try Systematic Writing Message 3270534

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