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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: TimF who wrote (13763)	7/8/2001 10:58:00 AM
From: Herm	Read Replies (1) \| Respond to of 14162

Well Tim, I guess you are more at ease with the use of margin than I am. It would appear with your scenario if an investor did not diversified enough and margined excessively in one segment, a market downturn (like the one we just experienced) would start triggering the domino effect of margin calls against the stock(s) and the possible necessity to cover those written covered calls or spreads at a loss to raise cash immediately. Margin requirements were raised during the recent meltdown forcing the owners to sell into downward falling prices. Not a pretty picture. I would hate to see naked puts in added to that scenario where the investor can't react fast enough to cover all the bases when they are gripped with shear fear.