Options Lesson 5 - Naked Call Writing
More than the amount of time value premium in the call
A naked write loses money if the stock advances by
Uncovered Write
Another term for a naked call
Rolling for Credits
Buying back calls when the stock reaches the next higher striking price and selling new calls for credit at a higher strike price
Deep ITM Naked Write
Instead of shorting stock for a few points of movement one can use
Kicker
Maintenance requirement applied against each naked call write
OTM Strategy
Naked call writing is used as an
Daily
Naked option positions are marked to the market
Naked Call Write
Selling a call option without owning the underlying stock or an equivalent security
High Risk
Selling naked options is
20% of the stock price + call premium - amount by which the stock is below the strike price
The margin requirement for a naked call
10% of Stock Price
The minimum margin required for a naked write
Index Options
The most favorable options for writing naked calls are
Stock stops rising and investor has sufficient margin
The two requirements for successfully implementing the strategy of rolling credits
Volatility Estimate of Stock
Time value premium is heavily influenced
Collateral
To write a naked call one needs to put up the following