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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: Mauricio Breternitz who wrote (63272)	6/25/1999 5:57:00 PM
From: Knighty Tin	Respond to of 132070

Mauricio, Here is the skinny as I know it. If somebody else knows more, I wish they would jump in. First, you can sell all you want in an uncovered or naked status, as long as you have the account net worth to cover the position. In other words, you could sell calls on $50,000 worth of your co's stock as long as you could meet all margin requirements and your brokers' account size requirement. As a matter of fact, most brokers require at least $50,000 in equity before they will allow naked selling. And many require $250,000. There is no real way to make these covered options or to make a short sale a short against the box. Your company options are an unfunded obligation of your corporation and not fungible for hedge purposes. Your broker cannot accept them as collateral, as far as I know. My experience with employee options is that when you decide to exercise them, it takes about 3 weeks to jump all the hoops. Your co. may be more efficient, but I wouldn't count on it without asking some hard questions first. I think the key is if you have assets other than these options which you can use to collateralize your short calls? If so, you know that you are covered and I wouldn't worry about early exercize, as you would just be short for a few days until you could exercize your options. One more note: if you have to report your trades as an insider or as a co. policy, you might want to think over whether or not you want your bosses to know you are selling calls against the stock. I have been called on the carpet for this very move in the past, and it is kind of embarrassing. Good Luck, MB