A short sale. Suppose that you are bearish (pessimistic) on IBM stock, ant that its current market price is $14 per share. You tell your broker to sell short 100 shares. The broker borrows 100 shares either from another customers account or from another broker. Assume the broker has a 60 percent margin requirement on short sales. Make a table of the investors account (assets and liabilities and owners equity) and calculate the meaning of margin.

Describe how increase and decrease of stock price will influence the margin. For example, consider situations when prices will be $12 and $18.

Draw graphs (or create tables) for a writer and a holder on a September put on IBM with exercise price $120.