Okay so I have a scenario. Let's say a stock is trading at $10 and I have a some call options with a strike price of $12 and the stock goes to $14. I then exercise my right and borrow $50,000 in order to exercise my options. Since the stock is at 14 and I have exercised my options at 12, will a margin call only occur when the stock drops 20 percent ? Since I'm already up 20 prevent on my investment ? In short is the 25% maintenance margin based off of market value of your investment or is it based off the book value of your investment ? I am basically using the option to give my self extra room for the stock to fall so I don't have to worry about a margin call, I will be using interactive brokers, thanks for the help.( yes I will use an automatic stop loss and a put options for additional security) Also someone please explain to me SMA balance.