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Technology Stocks : CMGI What is the latest news on this stock? -- Ignore unavailable to you. Want to Upgrade?

To: Eric who wrote (4974)	2/25/1999 9:13:00 PM
From: Kayaker	Read Replies (1) \| Respond to of 19700

what is the capital requirement for selling puts? say if you sell 10 contracts of Jun 110 p, do you need to have $110,000 in your account? The capital requirement varies from broker to broker. It's much less than 100% but changes as the stock/put price changes. I'm a light sleeper, so I don't sell puts unless I have 100% cash to back it up. If the stock drops, you can always "roll out", ie, by buying back your put and selling a later month. Selling puts is growing on me in these choppy markets. By selling the June 110 puts for 24.5, I either get assigned CMGI shares for a net price of 85.5, or they expire and I keep the premium for a 22.2% return in only 3 months. I'm not sure which I prefer. :-)

To: Eric who wrote (4974)	2/25/1999 9:19:00 PM
From: Sowbug	Read Replies (1) \| Respond to of 19700

what is the capital requirement for selling puts? say if you sell 10 contracts of Jun 110 p, do you need to have $110,000 in your account? First of all, it's tough to get approval to write naked (uncovered) options. Many brokerages require equity of $50K or $100K, and then allow writing of options that, if exercised, would require equity over and above that floor sufficient to buy the underlying stock at usual margin requirements. Example: I have $50K cash in my account. I apply for and am approved to write naked options. I can't actually sell any, though, because I have only the bare minimum for that level of options trading. Example 2: Same but I have $75K cash. I can sell 20 March 25 puts on stock XYZ, because if the stock were put to me, I'd have to pay 20 x 100 x $25 = $50,000 to buy it, and my $25K in equity over the $50K floor, margined to the brokerage's maximum 50%, lets me buy exactly $50K of marginable stock.