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Strategies & Market Trends : Gorilla and King Portfolio Candidates -- Ignore unavailable to you. Want to Upgrade?

To: The Reaper who wrote (5648)	8/31/1999 7:37:00 AM
From: Wyätt Gwyön	Respond to of 54805

kkirby, I've been selling calls on margined QCOM at E-Trade for my account and an account I manage. I could understand this if you are not using "equity buying power" margin but rather "cash available to borrow" margin (half of equity buying power). In that case, the cash you use to buy would be covered by margin equity through a larger portfolio. However, if you just open a fresh acct w/say, 6K, then margin up to a 10K position in RMBS common (100 shares), then sell 1 call for 5K against it, then remove that 5K from the account, then it seems like you have written an almost totally naked call. You are in a bit of trouble if you get a margin call (could easily happen w/only 60 percent equity). If price of common falls at all below 100, you risk a margin call. If that happens, your call is no longer covered. Don't know how they handle this but suspect it is not pleasant.