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Strategies & Market Trends : Selling Puts: Have Cash Will Travel -- Ignore unavailable to you. Want to Upgrade?

To: Tim O. who wrote (1148)	4/9/2000 11:27:00 AM
From: Tom K.	Read Replies (2) \| Respond to of 1235

...can you tell me more about what t-bill instrument you use.... Tim, T-Bills are short term government instruments paying 5-6% interest. They are considered as good as cash by the broker. Therefore, when you sell a PUT and cash collateral is required, the broker does not pay any interest on the cash collateral, only on free cash; however they will allow T-Bills to be used as collateral and you can therefore get interest on that. Just another way to keep your money continually working and it can add another 5% to your profits. I don't pay attention to the interest level because anything above 0 is better than what the broker will pay. T-Bills are generally sold in $10K minimum amounts and sold at a discount to face value. A $10K note payable on Aug 17 will cost about $9.8K today and will pay $10K on due date. Broker commission is about $50 regardless of size (therefore the larger the better). The point is that it is free money for PUT sellers. Hope that helps. Tom