Seeking Alpha

Tom Armistead » Comments » Single Comment

  • Stick with Covered Calls [View article]
    What I was trying to say is that I don't normally hold cash in my account sufficient to cover all the puts I have sold. So, if I wind up getting assigned on a lot of the puts, the money has to come from somewhere, and that would be margin borrowings. Investors trading on margin run the risk of margin calls which cause extremely bad investment decisions, not to mention it is hard to earn money fast enough to pay the interest.

    By limiting any sale of puts to cases where I already own the stock and keeping the ratio at one to one or less, I think I keep my overall exposure manageable. When doing what I think I should, I have about 10% cash and no margin borrowings. If the market tanks and I am assigned, I know I have enough collateral to pay for the additional shares and hold them if necessary.




    On Jan 04 01:28 PM Roger Nusbaum wrote:

    >
    > "if I am assigned on the puts I have the shares I own available to
    > meet the obligation using margin"
    >
    > assignment of puts results in buying shares, I'm not sure I follow
    > what you mean about having the shares if assign on your puts.
    Jan 05 08:02 am |Rating: +1 0
All Comments by Tom Armistead »
Comments by Ticker
A, AA, AAPL, ABC, ABFS, ABK, ABT, ACAS, ACE, ACET, ACF, ACLS, ACS, ACTU, ADBE, ADI, ADP, ADPT, ADRE, ADS, AEP, AET, AFF, AFL, AGII, AGO, AHCI, AHL, AIG, AIG.PA, AIRN, AIZ, ALD, ALGT, ALL, ALTR, ALXN, AMAT, AMD, AMPH, AMTD, AMZN, ANEN, ANGO, ANN, AOI, APAC, APC, APH, APOG,
Tom Armistead is a
Top 100 Commentor
832 comments
Rating: 1250 (1990 - 740 )