You write a naked put option of June 20, premium of $3 per share, market price per share of $21. Your margin requirement is
A) $ 620.
B) $2,000.
C) $1,000.
D) $ 100.

Question

You write a naked put option of June 20, premium of $3 per share, market price per share of $21. Your margin requirement is
A) $ 620.
B) $2,000.
C) $1,000.
D) $ 100.

Quizplus · Accepted Answer

The margin requirement for writing a naked put option is typically the greater of 20% of the underlying stock price minus the out-of-the-money amount plus the premium, or a minimum amount set by the broker. In this case, 20% of $21 is $4.20, minus the out-of-the-money amount ($21 - $20 = $1) plus the premium ($3), which equals $6.20 per share. For 100 shares, it is $620.

You Write a Naked Put Option of June 20, Premium