Which TWO statements are TRUE about writing
I. The maintenance margin requirement is 25%.
II. Physical delivery may be required upon exercise.
III. The writer has cash on deposit equal to the cost
to purchase the shares from the option holder.
IV. It is a bearish strategy.
a) I and IV
b) II and III
c) II and IV
d) I and II
correct answer is c)
I is incorrect because there is no margin
III is incorrect because a call writer must have
the shares on deposit. A put writer is required to
have the cash equivalent.