A note of our newbies: when you see a trade idea like this, you should immediately realize how much "margin requirement" or min. cash balance must be available in your margin account just for this trade. This is how you calculate it:
min. cash requirement = # shares x (spread-premium)
In this case Ziv sold 33 contracts (or 3,300 shares) at $0.30 a share for a credit (or max gain) of $999. So:
min. cash requirement = 3300 x (5-0.30) = $15,510 plus commission
If the available cash in your account is say only half of that account (about $7,800) and you decide to do the trade, you can sell half of that amount, say 16 contracts for a max gain (=premium) of 1600 x 0.30 = $480 (minus commission) which require a min. cash balance of only :
1600 x (5-0.30) = $7,520 plus commission.
Your hope is if the stock closes at $40 or less on OED (Dec 20), you will pocket the full credit of about $450 that you have received upon execution of the trade.
Hope that helps for cash trapped newbies.
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