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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: mc who wrote (8188)	8/11/1998 4:08:00 PM
From: VincentTH	Read Replies (1) \| Respond to of 14162

Gary, Who is your broker? At Waterhouse they do the following: Calculate the requirement for the put, and if it is under $25,000 you are required to maintain margin equal to the purchase price. Say you sold 10 naked puts at $20 strike, then the requirement is roughly $10,000 cash or $20,000 in security. You can also get away with a lower margin requirement by establishing a Bull Put Spread, by buying, say, 10 puts with $15 strike price, and thus reduce the margin requirement to roughly ($5000 - cost of the 10 long puts.) For naked puts, there are initial requirements, and maintenance requirements. Message me, and I can send you the formulae for those. (Thru trial and error, I can also calculate the stock purchase power to the dollar for my Waterhouse account.)

To: mc who wrote (8188)	8/11/1998 4:12:00 PM
From: Zach E.	Respond to of 14162

Selling cash-secured puts.. 1. Is this really an uncovered position? No, as long as the cash is maintained. In fact, selling puts with cash to cover the stock is almost identical to selling covered calls, as pointed out by McMillan. However, selling puts is considered "dangerous", while selling covered calls is "safe". Stupid, but what are you going to do.. Unfortunately, your broker is allowed to set whatever rules he/she wants. The big minimum balance is definitely not unheard of. do you know of a broker who allows this kind of trading? E*Trade allows one to sell puts, if you get "level 3" approval. There is no minimum balance for this, and I've been approved for it, although I haven't actually sold any puts yet. Ironically, selling "covered puts" (where one sells puts versus short stock) only requires level 2 approval, and is equivalent to selling naked calls! Zach