Steve-E-Man, Not Exactly, Very Seldom do we play Naked options although selling Puts naked is probably our most often used naked trade!? We NEVER sell calls NAKED, EVER!
That said, we actually Sell puts and Calls against our Long positions and end up RAISING Cash, NOT Expelling it!
As an example we Sold Short Mar44 puts at 1.00 and raised Serious money since we OWN Mar46 puts!
Own Mar46 puts at 2.53, bought long
Sold Mar44 puts at 1.00, sold short
This trade netted us 1.00 in CASH since we own the Mar46 put's!
46 - 44 = 2.00, paid 2.53
sold Mar44 puts at 1.00
The moment we sold the Mar44 puts our account gained 1.00 in cash to spend anyway we choose!
In addition we OWN Mar43 puts as well and this position allows us to Sell our Mar46 puts if the Q's get down to 43.00 and still maintain a minimum Cash Reserve Lock against our Funds!
We use this concept constantly to sell and buy back over and over again with little to no Lockup of CASH and often actually Raising Funds because we sell against long positions and the OVERLAP actually releases CASH for uses elsewhere!
In Summary, Naked Selling, NOT very often and its always PUTS sold short that we'll let ride naked from time to time, especially if we've already banked some nice profits to bank against any losses we may incur if the trade goes against us!?
We'll also go NAKED, on puts, if we feel we've reached a SERIOUS DOWN move that may be ending and the Premiums are so great that we'd have plenty of time to protect ourselves if prices keep falling!?
Warm regards and keep dem questions coming, good nite!
nm
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