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So most brokers require minimum of $2k to open a margin account. FINRA requires minimum margin equal to 25% of the market value. Brokers must honor FINRA, but can increase margin requirements to their liking. For the example trade in this thread, FINRA requires $225, your broker requires...

In looking at TradeStation's margin requirements, it looks to me like 3.8 + 5 = 8.8 * 100 = $880 + C&F, with initial maintenance at $500. I'm just curious, why did you divide by four?

It is all a bit confusing. Here's my take: In order to trade defined risk spreads, you have to have a margin account and a cash account, but the trade is typically executed from the cash account. The reason for requiring a margin account relates to the possibility of being assigned on the short...

Yeah, that sounds right, assuming you could get a $3.80 credit. So BP reduced by $120 plus C&F. And should you ever get assigned, just close the stock position immediately.

If you watch the video on YT, in the video description, it just indicates defined risk spreads, but it looks like they are talking verticals. I think ATM means their short strike was ATM, and spread width is based on points. Anyway, I couldn't get it to compute using an OTM strike and strike...

Just out of curiosity, I took a closer look at this. I got the MC they show on their chart to make sure I was calculating it right, but when I applied it to strikes with five point intervals, it doesn't seem to work. The MC just kept going up as I widened the spreads -- took it out to 40 points...

Recently, I noticed a thread where it was pretty clear the guys at TastyTrade are not held in high regard around here. :) However, in my ongoing quest to become more knowledgeable about options from the sell-side perspective, I came across the following TastyTrade video where they give their...

So you're saying that when the premium equals intrinsic, that is where parity occurs and nowhere else? So intrinsic that is either greater than or less than the premium is simply above or below parity? So if you bought a $5 call and the spot was 6 pts above the strike, you would have 6 pts of...

By now, the poor guy has gone catatonic. :)

You just scared the hell out of him. He'll probably never come back. lol

I think it's just the opposite -- both should be <= to be at parity. This is my *new* understanding of parity (subject to change lol): Intrinsic = spot - strike (for calls) or strike - spot (for puts). If the premium is greater than intrinsic, then the difference represents extrinsic, so no...

. Take your time. No hurry. Thanks for showing an interest.

Trade MES.

I don't trade options, but the volume/spread issue for XPS is good to know. Thanks. BTW, I am also with AMP and use Sierra Chart.

If you want to explore index options trading, instead of starting with SPX, you might want to check out the mini-SPX to get your feet wet: XSP

Even if you have an edge on determining direction, you would still be better off trading the S&P futures. Just looking at your first two screen grabs: Had you bought the 4110 Call right after the open and paid the 19.20 ask, then sold it 45 minutes later and took the 39.50 bid, you would have...

I think I'm getting confused about parity, but let me give it another shot. If I'm short a 10DTE 50 put that is at parity with the stock trading at 43, I'm thinking the short put must have sold for $7, so $700. However, with 10DTE, I don't see how we could be at parity (no extrinsic left)...

Yes, post it.

I know you well enough to figure there must be something favorable about being assigned or you wouldn't have asked the question. lol Let's say I'm short the 50 put and the underlying is at 40. I'm either down 10 on long stock or I'm down 10 on a short put. So what's the advantage of being...

Well, if you want to own the underlying, it's not. But from what I've read, most net sellers of options seem to be interested in collecting premium and have no interest in owning the underlying. Not far enough into all this to take it any further than that. :)