Margin requirements for writing Puts

Discussion in 'Options' started by Springy111, Aug 21, 2009.

  1. Hi All,

    A question made up of two parts for the mighty panel:

    As hard as I try, I cannot for the life of me find what the margin requirements are for writing PUT's on the LIFFE exchange. My brokers website refers me to the website where these requirements are set, however I cant find a thing.


    Assuming its 20% of the value of the underlying stock (minus a few other bits and bobs like premium etc), does this mean that the initial margin would be:

    10 PUT contracts (1000 shares per contract as its european style)
    Share price: £10
    = Initial Margin of £20,000 ?

    If the maintenance margin is £15,000 (I also have no idea how this is worked out) would that mean I would need a total of £35,000 in my brokers account to cover the margin requirements?

    Also, if the underlying was to drop to say £9, would I need to deposit more collatoral to cover the margin requirements, or am I good until the stock drops at least 20%?

    My intention here is to write PUT's on stock that I am certain wont drop in value within a month, and pocket the premium. I dont want to risk writing too many PUT's and have my broker liquidate them as a result of a margin call.

    Margin requirements for options seem to be a very complicated thing.

    Assuming I haven't got the whole thing completely wrong, any help is greatly appreciated!! Broker is IB incase it matters.