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

To: Jill who wrote (1555)1/23/2000 11:42:00 PM
From: steve mamus  Respond to of 8096
 
Your comments about margin requirements and the margin chewed up by selling naked puts is dead on. Schwab also indicated to me as you have that selling covered calls does not increase your buying power which surprised me. Thanks.

Steve



To: Jill who wrote (1555)1/24/2000 12:42:00 AM
From: Jeffry K. Smith  Read Replies (1) | Respond to of 8096
 
A correction - selling covered calls DOES affect your buying power - it *increases* it - IF the sale of calls is done after the purchase of your stock.

If you sell the calls (as effectively a spread) when you buy your stock, then there is no effect which is traceable to the option sale - the purchase/option sale is net debited against your available margin.

Selling calls is like depositing money into your account.

Best,
Jeff Smith


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