Rearden Metal, you're being kind to me. Actually, in this example, 100% of my entire $6.91 investment is at risk, should AGIX go to zero. Yes, I have studied the company and its financial statements, especially the Form 10K released on March 8th. I have made a considered decision to accept that risk. Apparently you feel otherwise. Think what the markets would be like if everyone shared the same opinion. Bob
Bob...sorry I'm not jumping on your case...however you did say in one of your messages that a "good" broker won't let you sell naked..or something to that effect. I believe good smart option brokers WILL let you sell naked puts, which just gives you more options (no pun intended) to work with. Although my above suggestion is a spread just in case the equity does go belly up. If you believe that it won't then the naked put is really a pretty good deal right now.
Thanks Richard. Actually, Schwab is a good broker, yet they "currently" (their choice of words) don't allow uncovered Put writing inside their IRAs. Schwab has made a decision at the executive level to actively pursue a big slice of the growing option trader market. My thinking is that they will take a closer look at everything once the new margin requirements become effective April 2. Bob
I am pretty sure that Schwab recently announced cash-secured put writing in their IRA's. Although I have not tried to do so yet. Don
Don, Schwab's IRA policy is set forth at: http://www.schwabat.com/Options_Trading/IRA.aspx ---------------------- There it says, "Currently, we allow approved clients to write covered calls and engage in long calls and puts in select IRAs. " Perhaps they have not yet updated their site. Bob
In early Dec they sent me an email announcing the cash-secured put ability in an IRA. I guess their web site has not yet been changed. Don
LOL. I think that Richard was suggesting that from a risk/reward potential, the Apr 10/2.5 vertical spread was a better bet than the covered call.
thanks that was what I meant...the fear is the stock going belly up which the spread at least limits the loss which you would experience with the CC or the naked put.
The AGIX news is in. The good news is that the stock didn't go to zero. The bad news is obvious. As a follow up, from a risk/reward perspective, your suggestion was on the money. At present, the Apr 10/2.5 vertical would have lost less than 1/2 of what the covered call under discussion lost. C'est la vie.