You entered a short position in TSLA at $500 per share. You want to ensure that...

You entered a short position in TSLA at $500 per share. You want to ensure that you will not lose more than $50 per share from your short position. What price contingent orders will you place in TSLA to ensure your potential losses are capped at $50 per share?

Solutions

Expert Solution

Short position means that the speculator has sold the stock at $500 and aims to profit when the stock price falls below $500. If the stock price rises, the short seller will lose money. Here the maximum loss that the short seller can bear is $50. Hence if the price of the stock reaches $550 then the short seller must close out on the position

In order to automate this, the short seller must put a buy stop loss order at $550

jeff jeffy answered 2 years ago

Next > < Previous

Related Solutions

Buffet purchased 500 shares of Telsa Motors (TSLA) stock trading at $40 per share. Assume that...

Buffet purchased 500 shares of Telsa Motors (TSLA) stock trading at $40 per share. Assume that Buffet’s account has an initial margin requirement of 60%. Moreover, suppose Warren’s broker requires a maintenance margin of 30%. Required Calculate the price at which Buffet will receive a margin call.

Warren purchased 500 shares of Telsa Motors (TSLA) stock trading at $40 per share. Assume that...

Warren purchased 500 shares of Telsa Motors (TSLA) stock trading at $40 per share. Assume that Warren’s account has an initial margin requirement of 60%. Moreover, suppose Warren’s broker requires a maintenance margin of 30%. Required Calculate the price at which Warren will receive a margin call.

You enter into a short position in one gold futures contract worth $500 per ounce. Contract...

You enter into a short position in one gold futures contract worth $500 per ounce. Contract size is 100 ounces. The initial margin is $2,500 per contract and the maintenance margin is $1,500 per contract. If the market closes at $497.50 per ounce at the end of the day, what is the balance on your margin account?

You enter into a short position in one gold futures contract worth $500 per ounce. Contract...

You enter into a short position in one gold futures contract worth $500 per ounce. Contract size is 100 ounces. The initial margin is $2,500 per contract and the maintenance margin is $1,500 per contract. 1. How much will the price of gold have to change for you to receive a margin call and will it need to increase or decrease? 2. What is your initial margin deposit? 3. . If the market closes at $497.50 per ounce at the...

Suppose that you sell short 500 shares of Intel, currently selling for $70 per share, and...

Suppose that you sell short 500 shares of Intel, currently selling for $70 per share, and give your broker $25,000 to establish your margin account. a. If you earn no interest on the funds in your margin account, what will be your rate of return after 1 year if Intel stock is selling at: (i) $74; (ii) $70; (iii) $66? Assume that Intel pays no dividends. (i) Rate of return % (ii) Rate of return % (iii)...

Suppose that you sell short 500 shares of Xtel, currently selling for $70 per share, and...

Suppose that you sell short 500 shares of Xtel, currently selling for $70 per share, and give your broker $25,000 to establish your margin account. a. If you earn no interest on the funds in your margin account, what will be your rate of return after one year if Xtel stock is selling at: (i) $74; (ii) $70; (iii) $66? Assume that Xtel pays no dividends. (Leave no cells blank - be certain to enter "0" wherever required. Negative values...

Suppose that you sell short 500 shares of XYZ, currently selling for $40 per share, and...

Suppose that you sell short 500 shares of XYZ, currently selling for $40 per share, and give your broker $15,000 to establish your margin account. If you earn no interest on the funds in your margin account, and assume that XYC pays no dividends. a.) So what will be your rate of return after one year if XYZ stock is selling at: i.) $44.00 ii.) $40.00 iii.) $36.00 b.) If the maintenance margin is 25%, how high can XYZ’s price...

Suppose that you sell short 500 shares of Xtel, currently selling for $70 per share, and...

Suppose that you sell short 500 shares of Xtel, currently selling for $70 per share, and give your broker $25,000 to establish your margin account. A. If you earn no interest on the funds in your margin account, what will be your rate of return after one year if Xtel stock is selling at: (i) $74; (ii) $70; (iii) $66? Assume that Xtel pays no dividends. (Leave no cells blank - be certain to enter "0" wherever required. Negative values...

1) Use the below table of share price for TSLA and index level for the S&P 500...

1) Use the below table of share price for TSLA and index level for the S&P 500 for the CAPM questions that follow related to TSLA. You can copy this table and paste it completely into Excel to avoid typing it out. Calculate the beta of TSLA. Date TSLA S&P 500 10/1/2018 67.464 2711.74 11/1/2018 70.096 2760.17 12/1/2018 66.56 2506.85 1/1/2019 61.404 2704.1 2/1/2019 63.976 2784.49 3/1/2019 55.972 2834.4 4/1/2019 47.738 2945.83 5/1/2019 37.032 2752.06 6/1/2019 44.692 2941.76 7/1/2019 48.322 2980.38...

You have entered a short position in an oil futures contract. The contract size is 1,000...

You have entered a short position in an oil futures contract. The contract size is 1,000 barrels for each contract. The initial margin required is $20,000 per contract. The maintenance margin is $16,000. The contract is entered at market close on January 7 at a price of $100/barrel. Fill in the table below. If a margin call occurs, indicate in the margin call column the amount that has been added to the margin account as a result of the margin...

Subjects