The Authoritative NSS Page

[jb1967lbk]

Not quite. It wasn't that the "buy-write" arrangement avoided closing out the short position in the stock. It DID close out the short position in the stock.

The problem was that it violated the way the SEC wants short positions in Reg SHO stocks closed out.

If you were to do a "buy-write" after an assignment against a short call position for a stock that was not on the Reg SHO list, there would be no violation.

HOWEVER, the letter of the law of Reg SHO is that the customer is not to be given the time to enter a "buy-write" after an assignment. The customer is to be jammed with whatever price is printed on the tape at the open, and then he or she can try their luck at re-establishing their short call positions later.