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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: GuyNixon who wrote (32212)	9/3/1998 5:47:00 PM
From: Joseph G.	Read Replies (1) \| Respond to of 132070

<<Will there be enough money to handle all our put contracts?>> Peanuts - a week ago I did estimate total potential payout on OI of listed puts in a '87 like drop - came to between $2 and 5 Bill.

To: GuyNixon who wrote (32212)	9/4/1998 1:21:00 PM
From: Knighty Tin	Respond to of 132070

Guy, Last question first. Never put over half a million in any one brokerage account and Uncle Sugar backs it. Over half a mil and you are taking the credit of brokerage firms, many of whom are junk bond quality. The OCC is a non-event. The real question is whether our margin system is good enough. At 50 pct. margin, I think it is. Everyone who sells a put has to meet certain levels of capital to meet obligations. True, if the stock market just goes away and the US govt. disappears, all bets are off, but that didn't happen even in the Depression. Remember, we put buyers can simply sell the stock to the seller, at which point he has to come up with the money. If he doesn't, the brokerage firm is on the hook. And the margin requirements will be MUCH higher, in fact, 100 pct., before we ever get to meltdown levels. I worry much more about "market holidays." Options are time sensitive and it would not surprise me to see the crooks close the markets for a week that includes expiration days. Just another reason not to wait until expiration before rolling out in time. We also have to remember that even in The Great Depression that most Americans remained employed and we were much better off, financially, than anywhere else. Today that is even more likely to be the case. MB