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Strategies & Market Trends : Options 201: Beyond Obi-Wan-Kenobe -- Ignore unavailable to you. Want to Upgrade?

To: Thomas Tam who wrote (40)	8/14/2001 12:21:19 AM
From: Dan Duchardt	Read Replies (1) \| Respond to of 1064

Thomas, I'm inclined to think of the margin requirements for naked puts as an advantage over some other strategies, assuming of course you don't get assigned or do something to protect your downside. Or are you talking exclusively about cash backed puts? If one picks apart the definition of a covered put, it often includes cash along with short stock as a way of "covering". It's semantics, but with that interpretation a cash backed put is never really naked. For a truly naked put, you typically need only 10 to 20% of the price of the underlying above the premium you collect to carry the position, depending on how far OTM it is. For an aggressive trader, or one who figures the odds are that only a portion of the short puts will be assigned at any one time, that requirement is pretty low. That of course means high risk if you push it to the allowed limits. Dan

To: Thomas Tam who wrote (40)	8/14/2001 8:29:56 AM
From: edamo	Read Replies (1) \| Respond to of 1064

THomas..."major opportunity cost" you can't spend opportunity, but you surely can spend premiums received from a put sale in a full cash backed position....better then money market, maximizes cash on cash return...return 20% per annum on a cash back account and you double your money in a little over three years... not the returns that the nouveau investors require, no ten baggers, but how many of those who always made loss of opportunity a major concern have much left in their portfolio... cash is king.....all else are false idols...