Portfolio Margining for Equities

Discussion in 'Options' started by arbs-r-us, Apr 4, 2006.

  1. In summary, the new proposal by the NYSE eliminates the 5mm dollar minimum requirement for portfolio margining on accounts that do not hold OTC derivatives positions. The earlier filing in December was the basis for expanding the portfolio margining to narrow based indices and individual equities. I expect these rules to become effective sometime this summer.

    http://www.sec.gov/rules/sro/nyse/34-53577.pdf

    In the end, the optimum account types will be as follows: Standard Margin account, eligible for option writing to hold all zero margin “strategy based positions”. This would be things like butterflies, calendars, condors, etc. Second “Portfolio Margin” account to hold the rest and any defined strategy that includes stock. The portfolio margin account is subject to a $37.50 minimum charge for each option held, long or short. I’m not sure if that aggregates at the instrument level or the account level. One other item I don’t quite understand is a statement within this filing prohibiting “day trading” within a portfolio margin account. Does that mean if you have a positive gamma position you are restricted from scalping the gamma? Need more color on this. Maybe a securities attorney reading here can answer to this.