Naked Call Margin Question

Discussion in 'Options' started by Sashe, May 11, 2004.

  1. Sashe


    I am trying to figure out the required margin for this position:
    Short naked SPX May 1120 Call @2.50
    IB home page explains that is should be
    100% * option market value + maximum (((20% * underlying market value) - out of the money amount), 10% * underlying market value, $250 * number of contracts). 20% above is 15% for broad based index options.

    Using the margin reqs page from IB I figured that the margin should be 2.50*(15%*1095-25)=$347. It seems to be pretty low... What am I missing?
  2. Sashe


    Looks like I made a mistake
    It should be 2.50*100+(15%*1095-25)=$389
    Still too low. Please enlight
  3. Try this:

    ((2.50*100)+(1095-25))*100)*.15 = 19,800
  4. Sashe


    Thx HelloDollars, too bad it only gives y0u 1% of return on your money in best case scenario (if call expires worthless)
  5. An unfortunate consequence of a low VIX.