Options question....

[cwsiggy]

A friend owns many shares of ORCL. He thinks it's going nowhere for quite a while. All the shares are in his 401K.
Can he write calls against this position for some income while ORCL flatlines till the cows come home.????? If the stock rallies and he gets "called", can he deliver the shares out of the 401k account sans penalty or at all??
Is it dependant on what his plan says??

[Sniper]

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Is it dependant on what his plan says??

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Yes.

In some IRAs you can sell covered calls. 401K usually not.

[cwsiggy]

Thanks. Maybe I'll just have him sell credit spreads away from his 401k anyway. meh - maybe he should just sell his ORCL period.

[Sniper]

Does he have ORCL in his 401K because he works there?

He could also buy Put protection, if he was afraid of losing value in the stock.

[AceHigh]

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meh - maybe he should just sell his ORCL period.

[/ QUOTE ]

ding, ding, we have a winner.

[cwsiggy]

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Does he have ORCL in his 401K because he works there?


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He used to work there for years. Don't know if that matters as to the rules of options against his 401k.