I sold 75 of the 2.5 strike puts for 1.00. (XNP Jan 05) On the extremes I can either make up to 1.00 or lose 1.50.
Charlie Schwab has tied up $37,500 of my margin for this trade. They say that they calculate the margin requirement by taking contracts * 100 * strike * 2.
Is this normal? Do other brokerages calculate margin requirements on a short naked put the same way?
The way I see it the most I can lose is 1.5 * 75 * 100 = $11,500. Therefore that is all I should have to put up as margin.
Thanks in advance for the help.
Mike
Charlie Schwab has tied up $37,500 of my margin for this trade. They say that they calculate the margin requirement by taking contracts * 100 * strike * 2.
Is this normal? Do other brokerages calculate margin requirements on a short naked put the same way?
The way I see it the most I can lose is 1.5 * 75 * 100 = $11,500. Therefore that is all I should have to put up as margin.
Thanks in advance for the help.
Mike