QUESTION 44

Suppose a stock is currently priced at $80. The margin requirement is 20% on uncovered calls and 50% on stocks.

Question: Calculate the required margin when you write 10 calls with an exercise price of $85 and a premium of $2.

		$13,000
		$20,000
		$29,000
		$30,000
		$45,000

Calculate the required margin when you write 10 puts with an exercise price of $100 and a premium of $25.

		$20,000
		$22,500
		$33,000
		$37,500
		$41,000

Suppose you buy 1,000 shares of stock at margin and write 10 call options with an exercise price of $85 and a premium of $2. How much can you borrow to purchase the shares?

		$20,000
		$25,000
		$35,000
		$40,000
		$45,000

In the above question, how much do you have pay at the contract? Assume that you are using the full borrowing capacity.

		$23,000
		$27,000
		$31,000
		$32,000
		$38,000