Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Margin Calls - Share The Pain -- Ignore unavailable to you. Want to Upgrade?

To: daffodil who wrote (54)	12/1/2000 6:14:58 AM
From: daffodil	Read Replies (1) \| Respond to of 158

Margin on covered calls, continued.... In figuring the equity on covered calls, 1) the underlying stock must be priced at the lower of market or strike price. and 2) the short call is disregarded. One of the positions in your account is: Long 1000 XYZ @ $50 per share = $50,000 Short the February $40s at ($15,000) Your actual equity on the position is $35,000. However, for margin calculation purposes, your equity is calculated differently: Long 1000 XYZ valued at strike of $40 = $40,000 Short Feb 40s are disregarded ($0) Your margin equity is $40,000. When covered calls are deep in the money, it can have a significant effect on the calculation of equity. continued.....