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How does selling options affect margin?????
- Thread starter spinn
- Start date
Many places require you to be "approved" to sell options on margin. Also, if you're trading a 401k account, you cannot sell options on margin at all. IB does not have any special approval--either you have a margin account or you don't.Quote from Comptalk:
Bank of America and Scottrade will not let me trade options on margin. They both told me this was not possible. This is not true?
To the OP:
IB has a page where you can compute the margin on any option combination here:
http://www.interactivebrokers.com/en/trading/marginRequirements/stockIndexOptions.php?ib_entity=llc
Futures Option margins are SPAN, which are impossible to give a simple formula for.
I agree with the other comments, selling calls in this market is basically jumping in front of a freight train and hoping it stops in time.
You can get short gamma (and therefore, theta) with ITM verticals, calendars, or butterflies.
I am a very short term OEX options trader. I often will sell calls when I expect a reversal. I also use IB. My experience is that the margin is really a problem. For example a $5 OEX option very near at the money will cost around $5,000 in margin or more. A real pain, however I still often prefer going naked this way so I don't have to start thinking differently as shifting from calls to puts in a short time span trading of 15 t0 30 minutes is a little unsettling. The shifting to puts can be confusing for a few minutes . It just much easier mentally to trade one thing. If it's going up you buy and when it starts turning down you cover and maybe sell some naked.
OMO.
Ron
OMO.
Ron
roncer,
Have you considered ES futures options? The spreads aren't great, but they're not worse than OEX, and the SPAN margins are muuuuch better.
Have you considered ES futures options? The spreads aren't great, but they're not worse than OEX, and the SPAN margins are muuuuch better.
I'm pretty sure this isn't true, but I'm no expert on SPAN.Quote from Bitstream:
it's the same as margins for the future contract i think.
An ES futures contract has ~$4000 in margin. An pretty deep OTM ES futures option can have margin as little as $500.
(This based purely on empirical evidence of checking my IB margin requirements after selling an ES option).