How does margin on Futures Options work? Is there a resource to explain the margin for various positions? I understand margin for equity options, so just need to learn any differences for futures. For example, if I buy a debit spread, do I pay the full premium immediately or do I put down a performance bond that marks-to-market each day (like a futures contract)? Or is the total margin requirement for a covered call less than simply holding the futures contract alone without a short call? My paper IRA account even let me sell a naked call, which is forbidden with equity options. This information must be available online, perhaps someone can link to a good resource. All the "futures options" tutorials I've found just teach general options spreads without explaining the mechanics for futures options.
Buying options or debit spreads require cash. Anything more complex requires the CME Core calculator which is very difficult to use and your FCM can have a higher requirement. https://www.cmegroup.com/clearing/cme-core-overview-demo.html
What @Robert Morse said is accurate information. Our trading platform, e-Futures Int'l has a margin calculator that does an excellent job providing you with the requirements.
Thank you @Robert Morse and @CannonTrading_Ilan for your replies. I believe the CME Core Calculator is the tool I am looking for. My understanding is then that futures options behave like futures, where there is a daily settlement price and mark-to-market. I wonder if any traders have thoughts about how they navigate this in practice? IRA margin for equity options is straightforward based only on the strikes/types/expirations (non-IRA margin has some dependencies on the underlying). I imagine there are some common sense rules that CME follows, like a long option will never require more than 100% margin, i.e. the full notional value of the option (but I better ask rather than assume).
If you open your futures account using a self directed IRA custodian like Midland IRA, your futures account at most FCMs is traded like an other futures account, not an IRA. https://www.midlandtrust.com/ Lightspeed Financial Services Group LLC. is not affiliated with this service providers. Data, information, and material (“content”) is provided for informational purposes only. This content neither is, nor should be construed as an offer, solicitation, or recommendation to buy or sell any securities. Any investment decisions made by the user through the use of such content is solely based on the user’s independent analysis taking into consideration your financial circumstances, investment objectives, and risk tolerance. Lightspeed Financial Services Group LLC does not endorse, offer nor recommend any of the services provided and any service used to execute any trading strategies are solely based on the independent analysis of the user.
Futures & futures options use “SPAN” margining. Don’t know the acronym but it’s essentially a risk based margining system that’s far more generous requirements compared with equities. Honestly, best way to get a feel for it is to trade it. In answer to your question though, if you buy a debit spread in future options, you have to pay the full premium with your cash, but the broker will often provide margin relief nonetheless (I.e. if you pay $2,000, the broker may have a capital requirement of $1,000). Also, unlike raw futures contracts, there is not a daily cash settlement for the options.