All rights reserved dr david p echevarria 12 margin

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Unformatted text preview: IREMENTS MARGIN A. A. Stocks 1. 2. B. Options 1. C. E. 100% of the price of the contract (already leveraged). Naked Calls 1. D. D. 50% initial for long and short positions. 25% maintenance 20-50% of current stock price plus/minus maintenance if option is 20-50% in/out of the money. Index options have lower margin requirements (15% due to Index lower volatility). lower Covered Calls: Stock is usually in street name (held in Covered margin account ) margin All Rights Reserved Dr David P Echevarria 13 HOMEWORK QUESTIONS HOMEWORK A. A. B. C. D. E. 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: 1. 2. 3. 4. 5. 6. G. Option premium Strike (or Exercise) price Option Contract 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.

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