Margin Question

Discussion in 'Options' started by dojistar, Sep 6, 2002.

  1. dojistar


    If you sell naked Options how do most brokers calculate the margin needed,
  2. I am making an educated guess that most brokers have the requirments set out for them by their clearing firms BUT most of them follow or are close to IB's margin computations. Look it up at their site for a good rule of thumb
  3. Per the CBOE margin manual - here's the minimum margin requirements (your broker may require higher):

    Initial and maintenance margin are the same - 100% of option proceeds/market value plus 15% of underlying broad based index value (or 20% of underlying stock or narrow based index) less out of the money amount if any to a minimum of option premium plus 10% of put's exercise price

    Note that most brokers will have different trader/account qualifications for shorting puts and calls (which will usually be much more strict).

    Various other margin rules if you put on positions in combinations - e.g., a short staddle (short a put and a call) has margin requirement that is either the requirement of the short put or short call whichever is greater plus the option proceeds/market value of the other side (so it's less than the sum of the seperate short put and short call margin requirements).