Intel Corp (INTC)

[jhalada]

chipgeek,

Actually, I don't think it's even this stringent. I think (but am not sure) that as long as your potential put obligation is less than a certain percentage of your account balance, then you can have that balance invested in whatever you want. So you can have all your money tied up in stocks working for you, and if the put gets exercised for some reason then the broker may sell some of your stocks to cover your obligated purchase.

I think that's how generally a margin account works. IRA is considered to be a cash account.

So if your broker's required ratio is 50%, and you have a $10,000 account balance, you can write puts that are worth up to $5,000 of the underlying stock.

I was under the impression that the brokers requires 100% of assigned cash value in an IRA, but I am not positive on that. It may be, as you say, 50%. But in your example, having $10,000 in the account and 50% cash requirement, you could write puts with value (when assigned) of $20,000 (if you wanted no safety margin).

Joe