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

To: BDR who wrote (2741)	10/15/2001 10:10:35 PM
From: Dan Duchardt	Read Replies (1) \| Respond to of 5205

Dale, Selling puts requires margin Why? What are you borrowing when you sell a put? You are entering into an agreement to buy stock at a future time at a fixed price if someone on the other side of that contract chooses to exercise their option. As long as you have cash allocated to meet your obligation, there is no risk of the broker having to loan you the money to do it. This is no different than selling a call backed by stock you stand ready to deliver should the call buyer choose to exercise the option to buy it from you. Both are covered positions. This is all tied up in the equivalence of issue of CCs vs cash secured short puts. I really believe it is up to the broker to decide if they will allow you to take on this position in a cash account. It is not a margin issue at all. Dan