--%>

How are short or future option margins paid at credit risk

How are short or future option margins to be paid at credit risk?

E

Expert

Verified

With futures and short options there are also margins to be paid, generally every day, to a clearing house like a safeguard against credit risk. Therefore if prices move against you, so you may have to pay a maintenance margin. It will be based upon the prevailing market values of the short and futures options.

   Related Questions in Financial Management

  • Q : Risks confronting an interest rate and

    Depict the risks confronting an interest rate & currency swap dealer.An interest rate & currency swap dealer confronts several distinct types of risk. Interest rate risk refers to interest rates altering unfavourably before the swap dea

  • Q : Define International Finance

    International Finance: It is the branch of economics which studies the dynamics of exchange rates, foreign investment, and how such affect international trade. International finance activities aid organizations emp

  • Q : Illustrates an example of complete

    Illustrates an example of complete market with volatility?

  • Q : Risk-averse investor will pay off for

    The risk-averse investor will pay off for risk when he will take on an investment project. Explain

  • Q : Explain the commonsense criteria that

    Explain the commonsense criteria that of a measure of risk.

  • Q : Benefits of paying late What are the

    What are the benefits of “paying late” and how do companies try to do this?

  • Q : Explain the different types of arbitrage

    Explain the different types of arbitrage.

  • Q : Reason to deficits account of United

    The United States contain experienced continuous present account deficits since the early 1980s. What do you think are the foremost reason for the deficits? What would be the consequences of continuous U.S. present account deficits?The present a

  • Q : Illustrates a swap dealer Illustrates a

    Illustrates a swap dealer. A swap dealer is a market maker of swaps and supposes a risk position in matching opposite sides of a swap and in assuring that each of counterparty fulfils its contractual compulsion to

  • Q : Accounts receivable are sometimes not

    Elaborate: Accounts receivable are sometimes not collected. What is the reason that companies extend trade credit when they could insist on cash for all sales?