Minimum and SPAN margins for options selling

I've done simulated trades in TOS for you.
By the way, CL option expiring on 07/15 is JUL too, not AUG.
So margin for CL will be $6,700 for near $100 premium, margin for ES will be $4,200 for miserable $12 premium, huh.

 

Couldn't attach both files in one reply.
So here's the ES trade.

 

thanks Dael...that is seriously crazy and seriously not worth it :eek:

 

I personally paid $500 for PC SPAN, and used it religiously for a while. I was able to determine that my broker was calculating margin incorrectly, and ultimately moved.

The amount of margin required by a FCM is a businss decision. Their risk department will make a determination based on how they perceive your level of risk. There is no financial reason for them to want to raise margin beyond exchange minimum... Except that it's their capital on the line if your losses exceed margin.

But you can directly ask your broker (if you are large enough that they want to have this conversation with you): are you okay with 100% SPAN? Do you want 200%? Etc.

 

I've seen margins on otc fx options for 6 figure premium's with only a couple hundred initial margin. But this is closed for US retail, unless you are an eligible participant (Dodd-Frank, cftc, etc.), i.e. $10 million. and there's counterparty risk, which I'd think you'd be wary of with that kind of money on the line.

 

Which service do you use to see otc option prices?

 

AFAIK, Alpari FX Options, is the only regulated retail otc fx option platform in the states. Though if I'm not mistaken they have the same SPAN margins you'll find on exchange. I'm not sure who this is to comply with, CFTC or NFA?

The minimal margin stuff I've seen has been closed 'officially' since last October, and a lot of otc fx stuff has been steadily closing shop to US retail in the last few weeks, like a damn snowball. I believe the deadline is July 15th for all these brokers and bucketshops to get out of sight of US regulation. Friday.

 

Can someone else run this SPAN please...what Dael quoted seemed a little high that I got to thinking about it...thanks

 

You've said about 2-3 times of premium to margin ratio.
Well this is asctual for very far month out-of-the-money options.
For example, you could get this 2 ratio on some corn or wheat December futures having $500 premium for $1,000 margin (just an example).
This is the way James Cordier uses in his invest fund (http://www.libertytradinggroup.com/traders.html).

 

see Dael...how did this guy get so low margin?