On the same day, a customer buys 100 shares of ABC at $40 andsells short100 shares of XYZ at $50.The customer then buys 1 ABC Jan 40Put@ $4 and 1 XYZ Jan 50Call@ $5. The breakeven pointsare:A. ABC: $36 / XYZ: $45B.ABC: $44 / XYZ: $45C.ABC: $36 / XYZ: $55D. ABC: $44 / XYZ: $55 The customer paid $4 for the ABC put and $40 for ABC stock, for a total of $44. This is the breakeven on ABC stock. Thecustomer sold XYZ stock short for $50, but paid $5 for the XYZ call, for a net receipt of $45. He or she must buy back XYZ atthis price to break even. To summarize, the breakeven formulas for long stock / long put and short stock / long call positions are: oHowever, the customer does keep the collected premium from the sale of the call.oNotice that if the short call is exercised, the customer does not go to the market to buy the stock for delivery;rather the customer already owns the stock. Thus, this short call is not naked; it is "covered" by the long stockposition.If the market falls, the call expires "out the money" and the customer loses on the stock position.This strategy is only suitable in a flat market; if the market rises, the customer does not enjoy the gain in the stockprice; if the market falls, the customer still loses on the long stock position.Options: Income Strategies: Long Stock / Short Call: Market UpA call is sold against a long stock position to generate extra income in a flat market; if the market rises, the call goes "inthe money" and is exercised, obligating the customer to deliver the stock at the strike price; the customer does not enjoyany further gains on the stock.oThere is a fixed gain if the call is exercised, since the stock is delivered for a fixed price (the strike price).oThe gain equals the collected premium, net of any difference between the stock cost and the strike price.Options: Income Strategies: Long Stock / Short Call: Market DownA call is sold against a long stock position to generate extra income in a flat market; if the market falls, the call expires"out the money" and the customer loses on the stock position.oSince the customer paid the cost of the stock, reduced by the collected premium, any sale for less than thisamount results in a loss.oThe maximum loss occurs if the stock falls to "0."Options: Income Strategies: Long Stock / Short Call: Breakeven Because the sale of the call results in the collection of the premium, if the stock price falls by this amount, the customerwill breakeven. 1. A customer buys 100 shares of ABC at $60 and buys 1 ABC Jan 60 Put @ $7. The breakeven point is: 2. In November, a customer sells 1 ABC Jan 70 Call @ $4 when the market price of ABC is $71. The customer's maximum potential gain is:  Q: An investor buys 100 shares of Altria at $82 per share on margin. The initial margin requirement is… A: “Hey, since your question has multiple sub-parts, we will solve first three sub-parts for you. If… Q: You've borrowed $27,392 on margin to buy shares in bxnay, which is now selling at $42.8 per share.… A: Equity shares are those shares which do not have preferential right on dividend and repayment of… Q: You purchased 1000 shares of IBM common stock on margin at $140 per share from your broker. 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If you bought a September '17 contract, one contract is for 5,000 bushels, and the price closes at $4.6595/bushel, what is your profit or loss? 2. Rob Thomas Traders opened an account to short-sell 1,000 shares of WeWork at $60. The initial margin requirement was 50%. (The margin account pays no interest.) A year later, the price of WeWork has risen from $60 to $76, and the stock has paid a dividend of $2.75 per share. 2a. What is the remaining margin in the account? 2b. If the maintenance margin requirement is 35%, will Rob Thomas Traders recieve a margin call? MATURITY LAST CHG HIGH LOW May '17 3.6125 -0.0525 3.6800 3.6075 Jul '17 3.6775 -0.0550 3.7450 3.6725 Sep '17 3.7525 -0.0475 3.8125 3.7475 Dec '17 3.8575 -0.0450 3.9150 3.8525 Mar '17 3.9575 -0.0400 4.0025 3.9475 You’ve borrowed $14,000 on margin to buy shares in Ixnay, which is now selling at $56 per share. Your account starts at the initial margin requirement of 50%. The maintenance margin is 35%. Two days later, the stock price falls to $51 per share. a. Will you receive a margin call? Yes No b. How low can the price of Ixnay shares fall before you receive a margin call? (Round your answer to 2 decimal places.)
You’ve borrowed $20,000 on margin to buy shares in Ixnay, which is now selling at $40 per share. Your account starts at the initial margin requirement of 50%. The maintenance margin is 35%. Two days later, the stock price falls to $35 per share.a. Will you receive a margin call?b. How low can the price of Ixnay shares fall before you receive a margin call? SEE MORE QUESTIONS
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A customer buys 100 shares of abc stock at $40 and buys 1 abc oct 40 put @ $4. the customer is
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