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Strategies & Market Trends : Options
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To: taxman who wrote (482)1/2/2000 8:29:00 AM
From: Wyätt Gwyön  Read Replies (1) of 8096
 
if you want to exercise 10 call contracts with 100 strike your cost is $100,000, requiring cash of $50,000 in your account.i believe this is still the case even though the underlying has risen to 200 per share and your strike is 100.
If underlying is at 200 and strike is 100, then you have equity of 200 - 100 = 100; i.e., 50%. So you can just use equity provided by ITM portion to exercise (assuming your broker approves of 50% margin equity as sufficient). I do not see where you get the 50K figure.
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