Cloud Fund had the following trades in Sun in the options market through David Brother Brokers. The stock exchange requires that the writer of the options maintain 10 percent of the value of the contract as margin money throughout the life of the contract. On January 1, Cloud Fund introduced

$100,000 as capital.

Transcribed Image Text:

Date Product Strike Price Expiry Quantity Rate B/S Brokerage 20-Jan-X1 Put $50 16-Mar-X1 12,000 $5.00 B $450 24-Feb-X1 Put $50 16-Mar-X1 14,000 $4.00 B $600 12-Mar-X1 Put $50 16-Mar-X1 15,000 $4.00 S $400 Liquidation Method FIFO Market Rate of Underlying Stock, Sun January 31: 48.00 February 28: 43.00 March 16: 55.00 Market Rate of Sun Put Option with Strike Price $50, expiry March 16 January 31: 2.00 February 28: 6.00