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Technology Stocks : Egghead Computer (EGGS) -- Ignore unavailable to you. Want to Upgrade?

To: taxikid who wrote (363)	3/11/1998 12:58:00 PM
From: broken_cookie	Read Replies (1) \| Respond to of 8307

hi taxi, one could write the 12 1/2 puts right now for 1 9/16 and sell them.. the $8000 may reduce the margin call, and allow the shorter to hold his position, stock at 12, short 50 puts underlying equity value = 60,000. Additional minimum margin requirement SEC rules = 20% of underlying equity value + cost of option = 20,000. Not a good way to recover from a margin squeeze. Now I know what you're going to say. "Those short puts are covered by the short position in the shares." Although that makes sense, "covered" puts are not allowed. The reason is that you may have the shares recalled at any time forcing you to cover the short and leaving you naked the option. my regards, Rich