Respecting your point of view, my reply remains the same. And yes, Using stock margin to write puts seems the most ridiculous strategy. When market moves sharply against you, as it has been seen repeatedly recently, you get double whammy. There is no rational in this strategy whoever is practicing it. But if he seems to do it to his satisfaction, great for him.
There is no double whammy as an investor the blue chips are there to be hold in corrections like a covered call writer will do.
And yes, on one hand you talk about margin, and on other hand you talk about risk and return. if you are SO CONFIDENT of bull market...as well as money outflow...and return TOGETHER, why bother about discussing writing puts?See my earlier post to praveen's reply as to why not to write puts, but buy calls if you are so confident of bull markets.
Even in bull markets, the stock may not move in the desired direction during less than one month period and roll over of calls as unlike roll over of puts are not remunerative. Hence, in absence of long term options like Leaps coupled with illquid farther month contracts, to use the strategy of buying calls fails to give consistent profit.
My bought calls give more than 50 to 250% returns (now if any of you will ask for contract notes, dont look further, check gujambcem 110CA and TISCO 440 CA over the last 18 days) in the bull phase...so lets not talk about 5% return etc.
I did not talk about returns like 5% per month for comparing them with yours. Even my own long call picks (and I am a newbie in Options) have given 50% returns in just one day but I still believe that it was application of TA and not options strategies which helped me in such trades.
I talked of returns only in reply to your statement that such person has no option trading knowledge. I wanted to bring attention to the point that one does not survive for long term with consistent returns in market without knowledge.
Looking forward to more words of wisdom from you on different aspects of option trading.
Best Regards,
--Ashish