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Unformatted text preview: IREMENTS
2. B. Options
1. C. E. 100% of the price of the contract (already leveraged). Naked Calls
D. 50% initial for long and short positions.
25% maintenance 20-50% of current stock price plus/minus maintenance if option is
in/out of the money. Index options have lower margin requirements (15% due to
Covered Calls: Stock is usually in street name (held in
margin account )
margin All Rights Reserved Dr David P Echevarria 13 HOMEWORK QUESTIONS
F. What is a derivative security and how is it valued?
What functions do derivative securities play?
What is a call option? a put option?
What bet is a call buyer making? A put buyer?
What is a naked writer? To what extra risk is the naked writer exposed?
Understand what is meant by the following terms:
6. G. Option premium
Strike (or Exercise) price
Naked call writing
Covered call writing
In- and out-of-the-money for calls, puts What are index options? How index options settled? All Rights Reserved Dr David P Echevarria 14...
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This document was uploaded on 02/11/2014.
- Fall '09