What is a protective call?

Short Stock/ETF + Long Call

A protective call is employed when a long call is paired with a round-lot (100 shares) of short shares.

Margin Requirement for a Protective Call

Applies only to margin accounts

Initial $5.00/share and below: greater of $2.50/share or 100% + the cost of the call option  

Initial above $5.00/share: greater of $5.00/share or 50% of the stock + the cost of the call option  

Maintenance below $2.50/share: lesser of 10% of the strike price + 100% of the out of the money amount of the call option or $2.50/share  

Maintenance $2.50/share to $5.00/share: lesser of 10% of the strike price + 100% of the out of the money amount of the call option or 100% of the stock  

Maintenance above $5.00/share to $16.67/share: lesser of 10% of the strike price + 100% of the out of the money amount of the call option or $5.00/share  

Maintenance above $16.67/share: lesser of 10% of the strike price + 100% of the out of the money amount of the call option or 30% of the stock