I want to understand the details of a market crash as it relates to margin requirements. Up until now, I only understand the concept of a crash. Below is an example of what I believe it means. For those who know, please fill in the holes of my misunderstanding. I'm a visual learner, so here's an example.
This past Friday, the June 2010 E-mini S&P contract had daily movement around 1130 going into the close. In the last few hours of Friday's trading hours, we sold a credit spread consisting of one short 925put sold for $280 and the purchase of one 900put for $220. This gave us a $60 credit. Tonight, the ES market will tumble overnight in the globex session. Tomorrow morning, we turn on the computer at 930, only to realize that the market has plummeted to 800. Our largest possible dollar loss, after this devastion, would be $2500 minus the $60 credit. When the trade was placed Friday, we had a $10000 margin account. What would be the absolute largest amount required for margin. It can't be more than $2500 can it? Thanks for the help.
Love Joshua
(Come on guys, a little humor. Plus, it's an ET first. Look for yourself)
This past Friday, the June 2010 E-mini S&P contract had daily movement around 1130 going into the close. In the last few hours of Friday's trading hours, we sold a credit spread consisting of one short 925put sold for $280 and the purchase of one 900put for $220. This gave us a $60 credit. Tonight, the ES market will tumble overnight in the globex session. Tomorrow morning, we turn on the computer at 930, only to realize that the market has plummeted to 800. Our largest possible dollar loss, after this devastion, would be $2500 minus the $60 credit. When the trade was placed Friday, we had a $10000 margin account. What would be the absolute largest amount required for margin. It can't be more than $2500 can it? Thanks for the help.
Love Joshua
(Come on guys, a little humor. Plus, it's an ET first. Look for yourself)
60 bucks?? Shit you can make more flipping burgers at BK with less risk..