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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: VincentTH who wrote (8193)	8/11/1998 5:58:00 PM
From: Caroline	Respond to of 14162

I'm pretty sure that the brokerage can't lock your cash account. Therefore, the short put is not covered, because you could sell the put and reduce your cash -- left hand and right hand not knowing each other... CB

To: VincentTH who wrote (8193)	8/11/1998 7:10:00 PM
From: mc	Read Replies (2) \| Respond to of 14162

Yep, it is a taxable margin account and the puts were trading at 7/8 x 1 1/8. The underlying stock was 4 11/16 and the strike price of the puts was 5. They told me it didn't matter that the maximum exposure was $500 per contract. They still require a minimum $25,000 equity in the account to enter into naked option positions even if I only wanted to sell one lousy put. I thought that was a bit ridiculous, but then this is the first time I've tried sell puts to enter a position so I have no basis from which to judge if this is a standard requirement from brokers or if my broker is just an idiot. It looks like the idiot call is the correct one. Thanks, Gary