Margin on Naked ETF Options

The margin is going to increase. The appropriate paragraph is:

>> For a listed, uncovered option on a leveraged ETF, the formula above will continue to apply; however, the percentages of the underlying ETFmarket value will be determined using the same methodology as the underlying ETF. Thus, instead of using 15% of the ETFmarket value for a broad-based ETF and 20% for a narrow-based ETF, a leveraged ETF at 200% would use 30% (two times 15%, or 40% for narrow-based) of the market value, and a leveraged ETF at 300% would use 45% (three times 15%, or 60% for narrow-based). <<

Figure out the nature of the ETF you're looking at and use the appropriate new numbers.

You can get some help with margin at the CBOE. They're calculator is at:

http://www.cboe.com/tradtool/mCalc/default.aspx

and they offer a margin manual at:

http://www.cboe.com/tradtool/mCalc/default.aspx


Yes, margin can be a PITA :)
 
What is your reading of the order of the increased margin calculation. Will they first increase the margin (by 2 or 3) and then back off the Out of the Money amount and still possibly produce 15 or 20% min requirement for deep OTM options.

Or back off the OTM amount and then double or triple the requirement.
 
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