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+294 Part Ill: Put Option Strategies 
+In either strategy, one needs to be somewhat bullish, or at least neutral, on the 
+underlying stock. If the underlying stock moves upward, the uncovered put writer 
+will make a profit, possibly the entire amount of the premium received. If the under­
+lying stock should be unchanged at expiration - a neutral situation - the put writer 
+will profit by the amount of the time value premium received when he initially wrote 
+the put. This could represent the maximum profit if the put was out-of-the-money 
+initially, since that would mean that the entire put premium was composed of time 
+value premium. For an in-the-money put, however, the time value premium would 
+represent something less than the entire value of the option. These are similar qual­
+ities to those inherent in covered call writing. If the stock moves up, the covered call 
+writer can make his maximum profit. However, if the stock is unchanged at expira­
+tion, he will make his maximum profit only if the stock is above the call's striking 
+price. So, in either strategy, if the position is established with the stock above the 
+striking price, there is a greater probability of achieving the maximum profit. This 
+represents the less aggressive application: writing an out-of-the-money put initially, 
+which is equivalent to the covered write of an in-the-money call. 
+The more aggressive application of naked put writing is to write an in-the­
+money put initially. The writer will receive a larger amount of premium dollars for 
+the in-the-money put and, if the underlying stock advances far enough, he will thus 
+make a large profit. By increasing his profit potential in this manner, he assumes 
+more risk. If the underlying stock should fall, the in-the-money put writer will lose 
+money more quickly than one who initially wrote an out-of-the-money put. Again, 
+these facts were demonstrated much earlier with covered call writing. An in-the­
+money covered call write affords more downside protection but less profit potential 
+than does an out-of-the-money covered call write. 
+It is fairly easy to summarize all of this by noting that in either the naked put 
+writing strategy or the covered call writing strategy, a less aggressive position is estab­
+lished when the stock is higher than the striking price of the written option. If the 
+stock is below the striking price initially, a more aggressive position is created. 
+There are, of course, some basic differences between covered call writing and 
+naked put writing. First, the naked put write will generally require a smaller invest­
+ment, since one is only collateralizing 20% of the stock price plus the put premium, 
+as opposed to 50% for the covered call write on margin. Also, the naked put writer is 
+not actually investing cash; collateral is used, so he may finance his naked put writing 
+through the value of his present portfolio, whether it be stocks, bonds, or government 
+securities. However, any losses would create a debit and might therefore cause him 
+to disturb a portion of this portfolio. It should be pointed out that one can, ifhe wish­
+es, write naked puts in a cash account by depositing cash or cash equivalents equal to 
+the striking price of the put. This is called "cash-based put writing." The covered call