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Tina has $5000 in cash and 300 fully-paid Colgate stocks in her account. Colgate stock is currently trading at $38. On day one, she writes. Colgate Nov 35 calls at $4.00. The initial margin requirement for the 3 uncovered calls is$3480. By the end of Day 1, Colgate stock drops to $37 and Colgate 35 calls close at 3 3/4 (3.75).

After Tina's position is marked-to-the-market, what will be the amount of funds in excess of margin requirements in her account?

display  helpThe amount of margin required at the end of the day for 1 uncovered option: 20 % of $3700 = $740 + 100% of $375 = $375________$1115 The margin requirement for three uncovered options is $3345. Tina has $5000 cash in her account and has in addition received 6 * $400 in premium. MARGIN = 20 % of the current value of the underlying stock PLUS 100 % of the premium. MINUS the amount the option is out-of-the-money.