How to calculate margin?

Hi All

I am having some trouble working out the IB margin formula which is:

100% * option market value + (20% * underlying market value - out of the money amount or 10% * strike price, whichever is greater) or $2.50 * multiplier * number of contracts, whichever is greater.


Now, If I have 1 short Put open position on XYZ which is at a stock price of $80, and my short position has a strike of $70, can someone calculate the margin requirment?

Thanks!

 

Create your trade in TWS spreadsheet, then use the right mouse button to see it's margin.

 

1) Take option premium

2) add 0.20 * (8000 -1000)

or add 0.10 * 7000

or add $250


whichever of the three is greater. In this case, it's option premium + 1400

Mark

 

CBOE site has a margin calculator that you may find useful. Fill in your info(prices, strategy, etc) and it will tell you what the requirement is

 

http://www.cboe.com/tradtool/mCalc/default.aspx

 

Ok thanks all for your help - I think Mark's post helped me the most.

Cheers!