Chapter 04 · Section 4.1

Margin Requirement- GM Puts

END OF DAY POSITIONS                MARGINS   CLOSING PRICES 
short 3 covered Colgate Nov35 calls $     0   Colgate Stock      $37.50
short 3 uncov. Colgate Nov 35 calls $ 3,330   Unisys Stock       $75.00
long  5 Unisys Nov 75 puts          $     0   Colgate Nov 35 Call $3.60
excess margin:             $ 2,820            Unisys Nov 75 Put   $1.75

TINA'S TRANSACTIONS ON DAY 3: Sold 2 GM March 70 puts at $2.00 

TINA'S POSITIONS DURING DAY 3        MARGINS  CURRENT PRICES  


short 3 covered Colgate Nov35 calls $     0   Colgate stock        $39.00 
uncov. Colgate Nov35 calls          $ 3,330   Colgate Nov35 call   $ 5.00
long  5 Unisys Nov 75 puts          $     0   GM Stock             $72.00 
short 2 uncov. GM Mar 70 puts       $ .....   GM Mar 70 puts       $ 3.00
excess margin:                      $ .....   Unisys Nov75 put     $ 1.75
What is the NEW margin requirement for the 2 GM puts? The calculation for 1 uncovered GM put is: 20 % of $7,200 + 100 % of $ 300 less out-of-the-money amount $ 200_____$ 1,540 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.