Hi ananths,
Both naked put writing and covered call are equivalent in their profit potential.But they are different as covered call requires establishment of two legs of transaction, one in cash and other in options plus transaction costs in cash and options market. Regarding your questions..
1) In India even stock options are settled in cash at expiry (European) and don't need to get worried at assignment of stock by the broker or exchange. You simply close the option on expiry day and rollover by selling the option of next series at/below the strike you got stuck . If we got stuck in very deep ITM option by expiry and unable to find proper options strikes in next series to rollover we can now accept the loss and buy the stock either in cash or in futures and start writing calls.
2) Your margins are always similar to margin requirement of futures at the corresponding strike. Lets say you sold RELIANCE 860 put you have to keep margin equivalent to RELIANCE futures at 860 price.
Both naked put writing and covered call are equivalent in their profit potential.But they are different as covered call requires establishment of two legs of transaction, one in cash and other in options plus transaction costs in cash and options market. Regarding your questions..
1) In India even stock options are settled in cash at expiry (European) and don't need to get worried at assignment of stock by the broker or exchange. You simply close the option on expiry day and rollover by selling the option of next series at/below the strike you got stuck . If we got stuck in very deep ITM option by expiry and unable to find proper options strikes in next series to rollover we can now accept the loss and buy the stock either in cash or in futures and start writing calls.
2) Your margins are always similar to margin requirement of futures at the corresponding strike. Lets say you sold RELIANCE 860 put you have to keep margin equivalent to RELIANCE futures at 860 price.