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Strategies & Market Trends : How To Write Covered Calls - An Ongoing Real Case Study! -- Ignore unavailable to you. Want to Upgrade?

To: Herm who wrote (11735)	10/23/1999 6:02:00 PM
From: Dan Duchardt	Respond to of 14162

Herm, Thanks for posting this information. As you can see, selling puts against cash is IRA eligible but very capital intensive. True, but no more so than writing CCs in an IRA, where you have no margin. For example, suppose I buy DIS at the current price $26, and sell the Nov27_1/2 call at bid 5/16, then my nut is 25_11/16, and that's what I have tied up. On the other hand if I sell the Nov27_1/2 put at bid 1_13/16 I have tied up the strike price 27_1/2 less the premium I receive or 25_11/16. Samo samo. If the price of DIS goes up, I can do nothing and keep my premium, or I can be a bit more aggressive, take a profit on the puts and write a higher strike, similar to the choices I have about rolling up the calls. If it goes down, I might wind up owning it effectively at 25_11/16, or I can avoid getting put to by taking a loss on the put and writing one at a lower strike. Dan