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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: David Wright who wrote (10872)	5/21/1999 11:11:00 PM
From: Jon Tara	Read Replies (1) \| Respond to of 14162

David, unless I am mistaken, you cannot buy any options on margin, not even LEAPS. It can get confusing, because certain option transactions DO involve margin (spreads and naked writing) but you AREN'T buying options on margin.

To: David Wright who wrote (10872)	5/22/1999 10:53:00 AM
From: Jonathan Roy	Read Replies (1) \| Respond to of 14162

I'm pretty sure you can buy options on margin at Dreyfus. They have a note: Option values for margin account are not included in the "Mkt Value" or "Equity" figures listed below, however, they are included in the "Liq Value". on the account status page. That suggests to me you can buy options with margin, but the options themselves can't be margined against. Just give them a call and ask. :) I've found Dreyfus' customer service to be quite nice both by email and by phone. Also, they call me at times to let me know of certain events. For example, I put in a buy on a TGLO option the other day and they called to tell me it was cancelled because the options don't go on the market until Monday. -Jonathan

To: David Wright who wrote (10872)	5/23/1999 11:25:00 AM
From: NateC	Read Replies (3) \| Respond to of 14162

David, you wrote: I've been watching GTW now for several months, thinking (gasp) about LEAPs and calendar spreads. Only trouble is, I don't think I can buy the LEAPs on margin, so it eats a big hole in my buying power. even, if you can't buy LEAPS on margin.....you, in a very similar way....ARE buying the stock on margin...when you buy LEAPS Let's say you'd like to play DELL, and you want to CC every month for a while. DELL is at 37 5/16....you'd like to play 10 contracts...so if you bought the 1000 shares it would cost you about $37,310. Let's say you only have $20,000 in your account...although we all know you're worth bezillions. at 50% margin, you don't have enough to buy the 1000 shares. BUT you can buy the Jan 2001 DELL LEAPS calls at 15 3/4....so you buy 10 contracts....which costs you $15,750. you still have $4,250 in your account, since you bought these LEAPS with Cash.....then you sell the Aug 40 calls at 3 5/8...and put another $3,625 into your acct.....so now of your prior $20,000...you have $7,875 left....having invested net $12,125 (LEAPS $15,750 - CC revenue $3,625)....anyone care to check my math, please do so. So LEAPS allow you to basically own the stock, CC it....and they may cost less than half the stock price...so they're cheaper than buying the stock on margin.