Explain margin requirements on the uncovered sale of options

Reference no: EM133489966

Problem: Finance Derivatives and Risk Management

Question I. Explain margin requirements on the uncovered sale of options. (150 Words )

Question II. Suppose that a stock is currently priced at SAR 50.

The margin requirement is 20 percent on uncovered calls and 50 percent on stocks. Calculate the required margin, in Riyal, for the following trade:

Write 10 call contracts with an exercise price of 45 and a premium of 7.

Question III. Market makers can use a variety of trading styles. Identify and discuss three trading styles. (200 Words ).

Reference no: EM133489966

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