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To: freeus who wrote (118326)	4/18/1999 7:13:00 AM
From: Jill	Read Replies (2) \| Respond to of 176387

Lynn, OT margin From what I understand, the way put selling is calculated is actually due to math that should be changed, and hopefully will. It's as if the math doesn't care whether you sold or bought, it just calculates a differential. It's not "intuitive" math, it's abstract. In fact, the whole way the industry hold margin is a bit odd--they have THREE different formulas, and they take the one that holds the most margin at any given time--not sure this reflects real time risk either. Anyway, as your "play" gains--as your put deteriorates and the stock rises--you do not necessarily reap all the benefits, especially if you wrote it and used it for a stock that Fidelity is strict about (say, CMGI, with 80% requirement). They just use a formula that holds more margin (still not as much as originally when you wrote the put). One can get annoyed, until one realizes that whomever thought up margin and writing puts was doing us a favor in the first place--free $! Ed has said that writing puts avoids margin calls--we should probably ask him about this, because theoretically it doesn't...if you used the money to buy stocks that then dip on a volatile downtick, and too much was required to be held, you could be in a margin call. Which is why, when I looked at my account last week I decided to play it safe, in case DELL or MSFT crashed further (which MSFT mysteriously did). I guess the best you can do is look at the trading range for your stocks and try to get a sense of the worst possible future situation--and then leave some breathing room in your margin. Some people like to buy stocks on margin, and writing puts could use up your capacity and irritate you. If you don't tend to buy on margin (I try not to), the capacity is sitting there and you might as well use it...Each to his own style, nonetheless a bit of caution is probably wise. (Or so I tell myself!) Jill

To: freeus who wrote (118326)	4/18/1999 9:57:00 AM
From: edamo	Respond to of 176387

freeus..your disappointment to "put" selling liken your on line less than full service brokerage bad experience to expecting a happy meal at mickey d's to be the same as lunch at twenty one...if you are going to do it.....do it right... the execution makes the difference ed a.

To: freeus who wrote (118326)	4/18/1999 5:16:00 PM
From: PAL	Read Replies (1) \| Respond to of 176387

re selling puts and margin calls: the online brokers vary from one to the other in giving accurate information. when you check the daily balances, my "old" broker showed how much room do you have for borrowing, or if you have house of fed calls. now my "old" broker was bought by waterhouse securities. the balance screen does not show how much borrowing power i still have left (it always shows zero, btu i can always buy more shares through live broker or sell more puts - comission is the sam for online or live broker on options trading. suppose you have a margin call, and you sell stocks. only 30% of the proceeds is applied towards the margin requirement, while cash is 100%, as well as closing position on naked puts. one can easily get carried away with naked puts, especially in an up market, and suddenly this nasdaq turning south, a wake up call! how about getting a home equity line of credit. the teaser rate is attractive (5 1/4% for 6 months) and then the rate is prime plus 3/4, commitiment fee $ 50/year beginnning second year, no prepayment penalty for 2 years. the beauty: it does not cost anything to get the loan. the bank pays all the closing costs! paul