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

To: peter n matzke who wrote (339)	6/10/2001 11:55:47 PM
From: Joe Waynick	Read Replies (1) \| Respond to of 355

Thank you for your response. I understand what you're saying, but it seems like such a strange rule. Owning stock and writing covered calls is no more / less risky than writing naked puts. The IRS says that since one owns the stock, they should have the right to sell my stock if the price goes up beyond a set strike price, and I can receive a premium for doing so. That's a timed instrument isn't it? Why shouldn't I have the right to buy a stock if the price goes down and receive a premium for doing so? According to McMillan, these two transactions are equivalent. As usual, the IRS in its infinite wisdom wants to control how I manage my personal finances. Sorry, but I'll get off my soapbox now. ;-) Joe

To: peter n matzke who wrote (339)	6/13/2001 11:26:30 AM
From: Joe Waynick	Respond to of 355

I had a long talk with the “Benjamin” in “Benjamin & Jerold” about their IRA accounts. You can do just about anything you want with options and equities EXCEPT the following: 1. You can’t short stock (that would involve borrowing) 2. You can’t sell naked calls (that involves margin) Otherwise, you can buy puts/calls, sell covered calls, sell naked puts (backed by 100% cash on the underlying security, buy/write spreads of all kinds. The key is they will not allow you to borrow or use margin. As long as the position is covered with other options and/or cash, they allow it. The IRS is perfectly okay with it. At this time, I’m only interested in naked puts and covered calls. The combination of those two strategies reduces the risk in my IRA considerably when compared to simply buying and holding or even using covered calls alone. It’s exactly what I’m looking for. If you’re interested, here’s their web address: stockoptions.com Joe