Chapter 04 · Section 4.1

Tina- Meeting her Margin

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 margin requirement is thus $3480.If Tina did NOT have $5000 on account, how much money would she have to deposit to meet her initial margin requirement?

a) $2280
• b) $3480
  No. $3480 is the initial margin requirement but Tina would have to deposit less than that because the premium received for writing the calls is credited to her account.
  c) $1080
  d) $3080

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