Which One of the Statements About Margin Requirements on Option

question 78

Multiple Choice

Which one of the statements about margin requirements on option positions is not correct?

• A) The margin required will be higher if the option is in the money.
• B) If the required margin exceeds the posted margin the option writer will receive a margin call.
• C) A buyer of a put or call option does not have to post margin.
• D) Even if the writer of a call option owns the stock the writer will have to meet the margin requirement in cash.

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Definitions:

Balance of Payments

A record of all transactions made between entities in one country and the rest of the world over a specific period of time.

Current Account

A segment of a nation's balance of payments that tracks the exchange of goods and services, net income from investments, and transfer payments.

Capital Account

A national account that shows the net change in asset ownership for a nation, reflecting movements of financial capital and tangible capital into and out of the country.

Current Account

A component of a country's balance of payments that measures the trade of goods and services, along with earnings on foreign investments minus payments made to foreign investors.