Margin

N

nycderivtrader

All,

I am trying to see what is the rate going with different people on how much $ of an account you will need for short selling options.

For example, someone with a $10k account will be able to sell fewer options than someone with a $20k account. My question is how do the brokers calculate how much you will be allowed to sell, and what is that amount?

NYCDT
 
For IB Reg T (PM is diff):

Short Naked Call = 100% * option market value + maximum (((20% * underlying market value) - out of the money amount), 10% * underlying market value, $2.50 * multiplier * number of contracts). 20% above is 15% for broad based index options.

Short sale proceeds are applied to cash.


Short Naked Put = 100% * option market value + maximum (((20% * (underlying market value) - out of the money amount), 10% * strike price, $2.50 * multiplier * number of contracts). 20% above is 15% for broad based index options.

Short sale proceeds are applied to cash.


http://www.interactivebrokers.com/en/trading/marginRequirements/stockIndexOptions.php?ib_entity=llc
 
Best way is to activate a papertrading account from IB or TOS, then enter the orders and you'll see the margin computed for you.

Not all brokers compute margin the same, remember
 
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