In a cash account, if a customer buys 300 XYZ at 48 and simultaneously writes 3 XYZ Jan 50 calls at 1, the customer must deposit $14,100.
In a cash account, the customer must deposit 100% of the value of the stock purchased $14,400. Thus, in order to determine the actual deposit, subtract the $300 in premium income received.
By depositing $14,100, the customer will have now $14,400 in the account. The difference being the premium income credited to the account on settlement date.
Hence, in a cash account, all transactions must be made with available cash. This allows you to purchase securities as well.
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