Rafer

2 Comments

ON: Mon Apr 21st 14:02 PM
Commented on:
A Crocs Play for Chickens

Paul,
You are absolutely right that you just need sufficient 'marginable equity', not cash, but I believe 'marginal equity' still represents cash. Yes, it's cash already invested and you are leveraging it (buying on margin), but if you wanted to buy a home and liquidated your 'marginal equiy' for a down payment, you would have to leave an amount sufficient to cover the size of your naked put positions in your account.
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ON: Mon Apr 21st 00:15 AM
Commented on:
A Crocs Play for Chickens

When you sell a naked put, you are required to put down an amount equal to the put price x 100 shares, in the case of your example, this would be a $1000. So your out of pocket expense is $1,442. So, if called away you will make $590 for a $1,442 investment, not bad, but not as good as you indicated.
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