Selling Calls?????

Hi To All,
I Am A Newcomer And So My Question Might Be Very Silly To Some..........kindly Ignore That And Reply.............


When I Buy A Call , I Pay The Premium And Theoritically If I Sell A Call, I Get The Premium...........but Practically What Sort Of Margin Requirment Does Any Broker Charge To Sell A Call????
( Kindly Reply From Experience With Your Broker With Illustration)

Abhijit Sen

hi Abhijit,

Example,
CONTRACT : OPT-NIFTY-31-May-2007-4200-CE
CMP Rs 72
ICICI is showing a total margin of Rs 54,780.00(order margin 25590 and trade margin 29190)
for selling.

for buying Rs 3600(Rs 72*50)

Thanks

swagat sir u again...................always leading the pack in helping newcomers.........thanks for the illustration..........everything clear

abhijit sen

tnx.......

Hi Isolanki,
When you want buy a stock of a company that has a good long-term prospects, you can sell the puts at out-of money rates..and keep the premium. Even if the put is exercised, you have a good stock at cheap price minus the premium you have received. So selling naked puts is a good strategy to buy good company calls at better price otherwise you can keep the premium.

Ha Ha Selling Put Is Risky...

It Need More Margin

And Loss = Unlimited

And If U Want To Invest In Good Compani
Then Buy Call
Margin Less/ Loss Is Initial Amount Paid

Hi kk,

Are not options cash settled here. I am confused . Could you please explain the strategy. I would really appreciate it. Thanks

Hello Kindman,
The whole derivatives and speculation is risky. Selling naked puts needs more margin but it can be offset by buying a call below the strike price of the sold put i.e. bear spread.
If you want to buy the stock of a good company, one would certainly like to buy it cheaper and not at a high price by buying a call.Why loose the premium by buying a call?
Unlimited loss?---
If the stock price approahes the srike price of my naked put,
1. I can offset my position by buying a call at the same strike price and accept a small lossor
2. I would sell the future of the said stock
3. even if the put is exercised, I can have a stock of a company at a cheaper rate.

Hi Isolanki,
you can visit www.YourBooksLib.com and access a few books on options and then you will get a fair idea....regarding margin you can see your broker's site.

its www.yourbooklib.com