The document discusses the strategy of cash-secured put writing, where the put writer deposits cash equal to the exercise price to eliminate margin requirements. It explains the potential returns and risks involved, including earning interest on the deposited cash and the risk of loss if the underlying asset's value declines. An example is provided with an investor writing a put option on XYZ stock. The document also touches on risk reduction strategies through hedging and the obligations of writers of uncovered calls or puts.
doj/DataSet10/EFTA01393131.pdf
{"document_type":"financial","document_subtype":"investment strategy document","reference_numbers":["EFTA01393131"]}