Brokers with low margin requirements on naked calls?

F

fgopc1

I'm attempting to write call options against shares I have that are locked up in another holding service.

Thus far, I've been writing naked calls on margin. Many brokers (Schwab, IB) have a margin requirement of option_value+max(20%*stock_value - out_of_money_amount, 10%*stock_value)

I started using Schwab and unfortunately as I wrote more and more calls, they bumped the 20% margin requirement on me to 60%, so now I'm looking at much steeper requirements:

option_value+max(60%*stock_value - out_of_money_amount, 10%*stock_value)

Such a high margin requirement makes it impossible to execute against my entire position, so I'm hoping to switch to another service.

Questions:
1. Are there other brokers out there that have lower requirements? (or at least won't raise them as you open a lot of positions?)
2. Are there any brokers out there where it'd be possible to prove the underlying shares are in another institution and thus have the options be viewed as covered? (thus subject to a much lower margin requirement) [e.g. a premium/fee service is fine]

Thanks!
 
Try Fidelity. I have heard some people moving their investment from IB to them due to margin so they might have better margin. Try Tastytrade; it's a new company so they might have something better.
 
fgopc1 said:
1. Are there other brokers out there that have lower requirements? (or at least won't raise them as you open a lot of positions?)
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If you qualify for Portfolio Margin and the symbol is marginable, the requirement would be lower. Typical would be the loss from a 15% move for margin and more for risk. 25% is typical for risk but for highly concentrated portfolios, it will be more. We go up to 40%.
 
Thanks all!

Fidelity actually has higher baseline margin numbers (https://www.fidelity.com/trading/faqs-margin). I called them and they couldn't tell me what my margin requirement would be in a portfolio that is highly waited as mine with naked calls on a single stock, which lowered my confidence there.

Tastyworks attests they'll never raise past 20% (and in general has much more aggressive margin requirements), so I'm likely to go with them (though part of me still worries that the desk could be wrong since every other broker I've chatted with raises margin requirements on concentrated positions)

Will try Lightspeed in a bit.

Truetype: Call credit spreads does solve the margin requirement, but at a pretty high cost. I'm using the proceeds of the calls to buy puts (forming a cashless collar); buying an even more out of money option eats into that a lot.
 
fgopc1 said:
Tastyworks attests they'll never raise past 20% (and in general has much more aggressive margin requirements),
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Not sure what that means or how they can say that. They clear APEX and APEX sets margin not the broker. The broker can only raise the requirement not lower it.

Good luck..Bob
 
Robert Morse said:
Not sure what that means or how they can say that. They clear APEX and APEX sets margin not the broker. The broker can only raise the requirement not lower it.
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Sorry, let me rephrase that. They stated that they won't raise past 20% due to individual portfolio risk (i.e. concentrating one's portfolio too heavily in a position). They certainly might change the 20% for the individual stock.

To translate: All traders of (derivatives of) a given stock see the same margin requirements. However, different stocks may produce different requirements.

Does this seem like a plausible scenario?
(Again, every other broker I've chatted with indicates they might change the margin requirements for accounts that seem especially over-concentrated in one position. Hence, the desire to verify here!)
 
fgopc1 said:
Sorry, let me rephrase that. They stated that they won't raise past 20% due to individual portfolio risk (i.e. concentrating one's portfolio too heavily in a position). They certainly might change the 20% for the individual stock.

To translate: All traders of (derivatives of) a given stock see the same margin requirements. However, different stocks may produce different requirements.

Does this seem like a plausible scenario?
(Again, every other broker I've chatted with indicates they might change the margin requirements for accounts that seem especially over-concentrated in one position. Hence, the desire to verify here!)
More...
Reg-T or PM?
 
Pretty sure we were talking reg-T, given the discussion on "100% of the option market value plus 15% of the underlying price for Broad Based Indexes or 20% for Equities and Narrow Based Indexes."
 
I have written on solid thick stone never never ever to trade credit naked option

forever and ever, till end of time and

even after end of time.
 
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