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