Covered calls and covered puts strategy

C2
1

I am confused as to why if I have a short position. Say SBUX and I want to sell a put out of the money on the position the transaction decreases my buying power? It is my understanding in the real world this doesn’t have any effect on the real world because selling an option against a existing position should have no effect on buy power because the existing position is covered? Please explain.



Also is collecitve 2 built on perl?



Thanks

2

Chad,



The answer is that C2 doesn’t correctly calculate buying power for options on multi-legged positions.



So if you are doing covered calls, vertical spreads, iron condors, etc., C2 looks at them as individual transactions, which can grossly reduce your buying power in error.



I brought this up to Matthew at least two years ago, but it still has not been addressed.



Jim

3

Jim: Thanks for the info.



Matthew: So when can we expect an adjustment to the software to account for buy write strategy? Also is C2 written in Perl?



Thanks



Chad

4

Chad:



In most cases the margining engine does indeed support simple buy-writes correctly. If there is a particular case you think your margin is improperly calculated, send an email to the help desk (help at collective2.com) including the system id#, the 2-leg position you think is not accurately margined, and the margin you think ought to be applied versus what you think C2 is showing.



As for your other question, yes, some of C2, particularly the front-end facing Web stuff, is indeed written in Perl.



Matthew