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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: Ira Player who wrote (12412)	2/29/2000 5:51:00 PM
From: Dan Duchardt	Respond to of 14162

Ira, I routinely sell covered calls within my IRA's. Option trading requires a margin account...but the ability to borrow is restricted. I routinely sell covered calls in my IRAs too. (If I choose to do so, I can also buy protective puts against long positions.) It is not necessary to have a margin account for such transactions. Here's the continuation of the quote from Reg T regarding allowed transactions in a cash account that I posted in Message 12997584 (3) Issue, endorse, or guarantee, or sell an option for any customer as part of a covered option transaction; and (4) Use an escrow agreement in lieu of the cash, cash equivalents or underlying asset position if: (i) In the case of a short call or a short put, the creditor is advised by the customer that the required securities, assets or cash are held by a person authorized to issue an escrow agreement and the creditor independently verifies that the appropriate escrow agreement will be delivered by the person promptly; or (ii) In the case of a call issued, endorsed, guaranteed, or sold on the same day the underlying asset is purchased in the account and the underlying asset is to be delivered to a person authorized to issue an escrow agreement, the creditor verifies that the appropriate escrow agreement will be delivered by the person promptly. It's my interpretation that (4)(i) opens the door to all kinds of options transactions, including writing short puts as long as you have to cash in escrow to buy stock put to you, and other "covered" transactions like spreads. I think this is why some brokers will let you do these things in an IRA. They are still cash accounts. Dan