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Strategies & Market Trends : The Covered Calls for Dummies Thread -- Ignore unavailable to you. Want to Upgrade?

To: Uncle Frank who wrote (214)4/24/2001 5:19:18 PM
From: EnricoPalazzo  Respond to of 5205
 
Fwiw, there's no such thing as a "covered put". Perhaps you are addressing the fact that you have cash or margin available to buy the stock if it is put to you. In that sense, all short put transactions are covered due to brokerage requirements that you have sufficient margin to enter into them.

thanks for letting me know.

--a true dummy.



To: Uncle Frank who wrote (214)4/25/2001 10:05:48 AM
From: William  Read Replies (1) | Respond to of 5205
 
>>there's no such thing as a "covered put". <<

Well, actually there is. If you are short the stock, then writing a put is the same as writing a call that you are long the stock.

Say I sell short IBM at 100. I then write a covered put, say an 80. Then say at expiry the stock is at 75, so it is put to me at 80. This offsets my short at 100, and my positions are closed.

William

edit -
Should have read the rest of the messages before posting this <g>.


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