Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: Dan Duchardt who wrote (42)	8/14/2001 2:06:34 AM
From: Thomas Tam	Respond to of 1064

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. This is where I got burned earlier in the year (March/APril), as the share prices went down, the margin requirements on the cash backed naked puts kept going higher and for a short period of time I was way over my comfort level. I kept shorting QCOM puts as it dropped from the 80s to the 70s to the 60s to the 50s, when it leveled off to 42 I was starting to truly wonder if I could handle it any further, almost panicked, but it left for some sleepless nights. (I was beyond my cash reserves with respect to put commitments). I tend to be less inclined to think this is the best price to buy and will continue to trade the volatility including naked calls which may or not be the thing to do. I think my earlier play of shorting multiple ATM SEBL calls and some further and higher calls was a combination of ratio writing mixed with selling(rolling) for credits all at once. I have since closed the short calls as the premiums collected more than cover the loss in the stock. I actually didn't lose any on the common as I was completely uncovered for a period of time aside from the recent buy last week at 29.85. Thanks for your thoughts on these things, makes for better trading with strategies and recoveries available.