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Strategies & Market Trends : Options -- Ignore unavailable to you. Want to Upgrade?

To: steve mamus who wrote (1537)	1/23/2000 9:43:00 PM
From: Bridge Player	Read Replies (1) \| Respond to of 8096

<< Could someone please explain the effect of selling puts and selling covered calls on your buying power in your account? >> I suggest that you call them and ask for a written copy of their policy as it applies to margin requirements for written options. They would be happy to send it to you. Further, you would be able to rely on it in your dealings with them. BP

To: steve mamus who wrote (1537)	1/23/2000 9:43:00 PM
From: cthruu	Read Replies (1) \| Respond to of 8096

How much commission are you paying to Schwab for options trades? I moved my accounts from Schwab because those commissions came to almost $10 per contract and executions were terrible. Besides, the Schwab site has been terrible to navigate even after so called improvements they have made. I would not recommend Schwab to any one for options trades! Regards: GP

To: steve mamus who wrote (1537)	1/23/2000 10:22:00 PM
From: Jill	Read Replies (2) \| Respond to of 8096

Steve, covered calls should not affect your buying power at all. Selling puts will require a hefty bit of margin to be held as collateral. Hopefully this is okay as I don't think any investor should be using up lots of margin in this market--they could get caught on a big correction and be in a margin call. When you sell a put you take the risk of having the shares put to you--and having to come up with that $ to buy them. So the brokerage firms hold margin collateral against it. They've got 3 different formulas and they always take the highest one! If your margin collateral is just sitting there collecting dust, selling puts is a great way to earn $. On JDSU tonight someone commented that 35% of their portfolio income this year came from selling puts. I'm looking at JDSU. Option Investor points out that Feb 210s have a premium of $17 and change. I'd find 210s a bit risky at this point (it is a decent level of support) and would go lower, to play it safe. But the premiums are great, and JDSU might (I hope) retrace later in the week.

To: steve mamus who wrote (1537)	1/23/2000 11:07:00 PM
From: Jeffry K. Smith	Read Replies (1) \| Respond to of 8096

Steve, selling covered calls will increase your buying power, because doing so has the same effect as depositing money in your account. For example, you have $5,000 in your account, and get charged no commisions (you wish). You buy 100 shares of stock @ $50 per share - $5,000. Your account goes to zero. You then sell the $50 calls for $5 (per share). This brings $500 into your account, bringing your balance to a credit of $500, which you can then use to buy securities/options according to your brokerage firms rules (100% for options, x% for stock). The stock you own will be sold at expiration at $50 if the stock price is at or above $50 (or so) at expiry, or if you are called away sooner, which is very rare. To sell covered calls, there are no margin requirements other than satisfying those pertaining to the original purchase of the stock. With the sale of puts, the requirements vary from brokerage firm to firm. Check with your broker on this matter. Best, Jeff Smith