If losses occur causing a market participant's balance to fall below the maintenance margin at the end of the trading day,a call option occurs that requires the bank to replenish the investor's trading account.

Question

Quizplus · Accepted Answer

The correct term for the scenario described is a "margin call," not a "call option." A margin call occurs when losses cause a market participant's balance to fall below the maintenance margin, requiring the investor to deposit more funds to meet the minimum margin requirement.

If Losses Occur Causing a Market Participant's Balance to Fall