Chapter 04 · Section 4.1

Tina- Margin Requirements

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.

How much cash does Tina have on account in excess of her margin requirement?

a) +3920
• b) -1520
  No. Tina received $2,400 (6 * 400) in premium when she wrote the 6 Colgate calls.

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