Initial margin requirement= 60000 x 15.29 x 10% X 2 cents + $ 1200
= $ 3,035
Loan from broker = 60000 x 15.29 x 2 cents x 90%
= $ 16,513
Margin call= 16,513/1-0.10= $ 18,347
Hence, price at which margin call will be recd= 18,347*100/(60,000*2)= 15.28 cents
Higher the volatility, higher the futures price. Hence, the initial margin requirement will also increase
Price of Call Option= Intrinsic value of call option + Time value of call option
Intrinsic value of call option (XYZ July 40)= $ 45- $ 40= $ 5
Since, price of one of the option is $ 8, it is price of XYZ July 40 call as time value of option can not be negative
Hence, time vlue of XYZ July 40 call = $ 3 and price is $ 8
Under Strategy A, the buyer of the option can buy share at a strike price of $ 40
Under Strategy B, the buyer of the option can buy share at a strike price of $ 50
Hence Strategy B offers a higher level of protection.
Remember, at the center of any academic work, lies clarity and evidence. Should you need further assistance, do look up to our Accounting and Finance Assignment Help
Proofreading and Editing$9.00Per Page
Consultation with Expert$35.00Per Hour
Live Session 1-on-1$40.00Per 30 min.
Doing your Assignment with our resources is simple, take Expert assistance to ensure HD Grades. Here you Go....
Min Wordcount should be 2000 Min deadline should be 3 days Min Order Cost will be USD 10 User Type is All Users Coupon can use Multiple