squawk

An Options Primer

Disagree with comments critical of your advice not to sell puts. First of all, there's no real comparison to writing covered calls with "covered" puts, b/c there's really no such animal as a shorting a "covered" put since the writer is obligating himself to purchase shares in the underlying stock if the contract is "put" to him. So to "put" this into perspective [no pun intended], one can only purchase a "covered" put, that is enter into a contract with the right to put shares presently owned to the writer of the put contract.

Moreover, when it comes to margin requirements, writing puts is completely different than writing calls. If one opens a short put position, brokerage firm is going to require that the writer has sufficient equity in his account to "cover" the short position, in the event the contract is put to the writer @ or prior to expiration.