Collaterizing 'in the money' options

[Sig]

"Your alleged ITM option position could easily be OTM the next day."
Would such a situation not just trigger a margin requirement. I was arguing from the perspective of a trading structure that uses options to net against other securities.

You may not be able to collateralize but this logic isn't really sound. A deep itm option on a stock like IBM is far less likely to lose half its value over time x then an ordinary position in a stock like GPRO, for example.

 

[Maverick74]

You may not be able to collateralize but this logic isn't really sound. A deep itm option on a stock like IBM is far less likely to lose half its value over time x then an ordinary position in a stock like GPRO, for example.

It has nothing to do with likelihoods. It has to do with securities lending. The process has to do with brokers earning an interest differential which they CAN'T do on an option.

 

[Sig]

It has nothing to do with likelihoods. It has to do with securities lending. The process has to do with brokers earning an interest differential which they CAN'T do on an option.

I actually quoted the wrong person, the quote I was referring to was ""Your alleged ITM option position could easily be OTM the next day." I was pointing out the fallacy of that logic. Your explanation definitely makes more sense!

 

[i960]

Seems like even if you could do what the OP is asking it'd be a sketchy idea in the first place. Anyway how about FOPs and mark to market? Does that fit into this?

 

[destriero]

Seems like even if you could do what the OP is asking it'd be a sketchy idea in the first place. Anyway how about FOPs and mark to market? Does that fit into this?

Yeah, I mentioned it earlier. A large upside mark will reduce your req.