OPtions newbie question

Discussion in 'Options' started by rnl8888, Feb 1, 2010.

  1. rnl8888


    Hello guys. I just bought a CL NYMEX MAR10 80.00 CALL at 0.23. Total cost according to IB order ticket was $232.75 however the order ticket also mentioned Initial margin as something $20k+. I am not buying on margin and since I am long call I am a bit confused why margin is even being mentioned.

    Can someone clarify this? My thinking is that total cost to me is $232.75 and no matter where the market moves, Ill only stand to lose a maximum of $232.75. Am I correct?
  2. Call customer service. Immediately (ok in the morning)

  3. I think someone didn't understand the difference between an option and a future? What will customer service be able to do?
  4. rnl8888


    I have extensively traded futures and stocks but this is my first option trade. I have, however read alot of material on options and everywhere, it was clearly mentioned that in long call and long put positions, the maximum one stands to lose is the purchase price and commission.

    Here in this, I am a bit concerned only because the ticket mentioned margins. Would really appreciate is someone can answer my query
  5. Nobody can answer the question apart from the IB customer service. Do what Mark suggested. It's entirely possible that their margin calculations are monumentally stupid and don't floor the premium at 0.
  6. Madeoff


    You are correct I just checked it on my platform and got the same pricing, and there is no margin recquired. The only thing I would suggest every time you buy calls or puts you should do it 60 days or longer away from expiration due to the time decay.

    here is a link with good option information: http://financialsaint.com/cms/cms/viewer/page/324/p_id/304
  7. smithi


    Did you figure this one out?
  8. If he sold by accident he made his money as the oil contract expired and it was below 80 USD.