Chapter 04 · Section 4.1
Combined Positions
Which of the following combined positions entail no margin requirement at all?
a) A customer who is short 1 IBM Sept 150 put and who is long 100 IBM shares deposited in his safekeeping account.
b) A customer who is short 1 IBM Sept 150 put and who has 5 IBM shares deposited in his safekeeping account.
c) A customer who is short 5 IBM Sept 150 puts and who is also short 500 IBM shares, to be delivered in October.
d) None of the above.
Being short a put means having an obligation to buy. The customer here has the obligation to buy 100 IBM shares at $150 per share if he is assigned for exercise.
Owning the underlying asset is needed to cover a short call. But this does not cover a short put.