Options Forum: Return On Investment Redux

Aside from the fact that Sandisk options have an implied volatility of 70 as opposed to Yahoo! options' implied volatility of 40, the time remaining is also an important factor for reducing the covered calls' margin requirement and boosting the return on investment. Unfortunately, with volatilities sitting near eight-year lows, there are relatively few attractive covered call candidates for taking full advantage of the reduced margin requirements.

Of course, every brokerage firm has the right to set its own requirements, which will vary based on the specific issue, position and, most importantly, how highly your account is valued in terms of dollar amount and trading activity. Typical brokerage margin requirements for many popular options positions, including spreads, butterflies and other multistrike strike strategies, along with options with stock positions such as collars, can be viewed at this site.

>To order reprints of this article, click here: Reprints