ET News & Sponsor Info
General Topics
Trading Instruments
Technical Topics
Brokerage Firms
Tools of the Trade
Trading for a Living
Community Lounge
Site Support

# Question about margin call

Discussion in 'Options' started by misterno, Jul 31, 2011.

1. ### misterno

I got 50K Ã½n my margÃ½n account

StrÃ½ke prÃ½ce \$32
OptÃ½on prÃ½ce \$0.41
Current stock prÃ½ce \$33.94

I want to sell put optÃ½ons and my broker's maÃ½ntenance ratÃ½o Ã½s
%35

I do not want to borrow money, I wÃ½ll use %100 my own money

What Ã½s the stock prÃ½ce when I wÃ½ll be exposed to margÃ½n call?

2. ### Gustaf

Didnt fully understand but if you dont wanna borrow your 50k is good for this in case there is an assignment:

32-0.41 = 31.59

50000 / 31.59 = 1582 shares

Rounded down to 1500 / 100 = 15 options contracts @ 32

Then you will never get a margin call.

My question is would u really wanna go all in in ONE STOCK?

Br Gustaf

3. ### spindr0

Can't be answerd for several reasons:

1) You haven't indicated how many puts you're doing

2) Determining margin is more complicated than saying it's 35% (see below)

3) It would require a bit of time to set up the calculation (which I'm not about to do)

Standard margin is 100% premium + 20% of value of UL - OTM amount with a minimum requirement of premium plus 10% of the exercise price. Premium can be applied to initial margin req.

So that means initial margin is \$525.80 per put and after applying the premium, SMA debit is \$484.80

To determine where you get a margin call, you have to indicate the number of naked puts and then calculate at what UL price the "35%" margin requirement exceeds \$50,000 (see #3 above)

4. ### misterno

so how do u apply %35 maÃ½ntenance ratÃ½o?

Is maÃ½ntenance ratÃ½o only applÃ½cable when we borrow money?

5. ### Gustaf

I was just telling you what happens at assignmen and as many contracts you can open not borrowing any money.

35% applies when the contracts are open.

6. ### oldtime

you could just do it the oldtime way.

Short 1 put and see how you like it.

Maybe I'm missing something, but if this stock is so great that you are sure it's going up or at least isn't going to go down, why not just buy \$50,000 worth?

Then you can be assured that you can lose your whole 50k without ever being bothered by a pesky margin call.

7. ### Gustaf

They say there are old and bold traders, which one are you

8. ### tomk96

not marginable. you won't be borrowing money unless assigned.

ET IS FREE BECAUSE OF THE FINANCIAL SUPPORT FROM THESE COMPANIES:
 AMP Global Clearing Futures and FX Trading Collective2 Automated Trading Services EdgeAnalytix Options Mentorship & Signals IC Markets True ECN for FX and CFDs Jigsaw Trading Advanced Trading Tools Lightspeed Trading Equities & Options Trading NinjaTrader Trading Software & Brokerage Optimus Futures Futures Trading Platforms and Order Routing Option Workshop Option Analysis Software PTMC Full Multi-Asset Trading Platform Rithmic Futures Trade Execution Platform SpreadProfessor Spread Trading Instruction TD Ameritrade Get the #1 trading app in the App Store TopstepTrader We Fund Traders Trademetria Trade Logging & Analysis TradersStudio System Development Platform Trading Technologies Trading Software Provider Tradovate Commision-Free Futures Trading