Answer: $1,410.00

**Correct answer: B ($1,410.00)** A short position in **three contracts** means **300 options** (assuming 100 options per contract). ### Step 1: Calculate the option premium value - Premium per option = \$2.70 - Number of options = 300 \[ 300 \times 2.70 = 810 \] ### Step 2: Determine the out-of-the-money amount For a put: - Strike price = \$20 - Stock price = \$23 - Out-of-the-money amount = \$3 per option ### Step 3: Compute the two margin formulas **Formula 1:** \[ 100\%\text{ of option value} + 20\%\text{ of stock price} - \text{out-of-the-money amount} \] Using total amounts for 300 options: - Option value = 810 - 20% of underlying stock value = \(0.20 \times 23 \times 300 = 1{,}380\) - Out-of-the-money amount = \(3 \times 300 = 900\) \[ 810 + 1{,}380 - 900 = 1{,}290 \] **Formula 2:** \[ 100\%\text{ of option value} + 10\%\text{ of strike price} \] - 10% of strike value = \(0.10 \times 20 \times 300 = 600\) \[ 810 + 600 = 1{,}410 \] ### Step 4: Take the greater amount - Greater of \$1,290 and \$1,410 = **\$1,410** So the margin requirement is **$1,410.00**.

Author: Manit Arora