expense of selling naked call, put?

Question

hi guys what kind of epense there is when you selling naked cal and naked put a mean to you have to pay interest and let say i have 25.000 dollar in my acount how many contract i can sell thank you.

Answer 1

The only expense for selling a naked call or a naked put is the commission. Commissions vary by broker, but can be $0.75 per contract or less. There is no interest expense, although some brokers may not pay you interest on the proceeds while the position is open.

The number of contracts you can sell depends on the margin required for the contracts. The margin required per contract at Interactive Brokers can be seen at

http://individuals.interactivebrokers.com/en/trading/marginRequirements/stockIndexOptions.php?ib_entity=llc

It is a bad idea to try to sell as many contracts as you can since a small move in the wrong direction would result in a margin call and you would be forced to close positions.