Wednesday, May 12, 2010

GOOG naked call close out

I was short 15 May GOOG $600 calls with entry points of .97 on 4/26 for the first 5 and .35 on 4/5 for the last 10 contracts. I closed them out today for .05. There is close to 0% chance this would have lost money with the stock at $505 and 8 trading days left. But for .05 it isn't worth the risk, and more importantly, it was tying up about $100,000 in margin for some reason. I tried to figure out the maintenance margin requirement on IBs site but wasn't able to find it. The calculations for a portfolio margin account are not stated clearly in words nor are there any mathematical calculations. I would rather have the 100K margin available for another opportunity then tie it up for another possible 15 x .05 = $75.

Total profit on the trade after commissions is $740 for 13 trading days. I can't exactly figure out the RoR because the maintenance margin number isn't anywhere close to the initial margin requirement. But assuming the rough figure of $100,000 the return is ($740/100K) = <>

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