Question

"A customer has an existing short margin account and wants to write five covered puts against 500 shares of stock that are short in the account. The margin requirement to write the puts is:"

Answer 1

Answer: 0

Explanation:

From the question, we are informed that a customer has an existing short margin account and wants to write five covered puts against 500 shares of stock that are short in the account.

Based on the above scenario, the margin requirement to write the puts will be zero. This is due to the fact that there is no risk that is attached to the short calls.