Short SVXY Put Margin Logic

[guru]

You made a guess at an overall requirement, There are people who say that losses can be unlimited. I would like to see mathematical proof.

He can easily verify it by doing what I suggested.
The losses cannot be unlimited when selling a put and anyone who doesn't know this shouldn't be trading.

While here is the proof showing the required margin on my account for selling the same SVXY put and for couple expiry dates, specific to the portfolio, not a static number like $6K:

 

[zdreg]

The losses cannot be unlimited when selling a put and anyone who doesn't know this shouldn't be trading.

Agreed, but I was in the mood for Black Magic.

 

[dcwriter2]

please explan than why the high margin requirement

That was my original question.

 

[dcwriter2]

I think the IB requester margin was like $6150 or $6250 or something. Weird. I mean it's csh-secured, $2,000 max, right?

 

[dcwriter2]

IB evaluates your margin based on other positions (total portfolio) and how your total balance would be affected if SVXY dropped that much.
Though it may also be due to leveraged ETFs not being marginable. Check how much margin would it take for you to buy 100 shares of SVXY.

I'm not sure what buying 100 shares of SVXY has to do with anything unless you are talking about buying a the strike price of 20, in my example.

 

[zdreg]

I'm not sure what buying 100 shares of SVXY has to do with anything unless you are talking about buying a the strike price of 20, in my example.

With options nearly always the underlying(stock) is the animal which wags the tail.(option).

 

[guru]

I'm not sure what buying 100 shares of SVXY has to do with anything unless you are talking about buying a the strike price of 20, in my example.

Because you have to do a bit of thinking and analyzing to get the picture and see whether the margin required for purchasing 100 SVXY shares is equal to its current price, or 3x the price, or 1/3rd the price, etc. This should relate to your attempt of selling the put. And that may be specific to your account/portfolio.
My required margin for purchasing 100 shares of SVXY is $187.

 

[Tony Optionaro]

You made a guess at an overall requirement, There are people who say that losses can be unlimited. I would like to see mathematical proof.

Ever heard of sarcasm?

 

[NewTraderAdventure]

If you sell (go short) the put, your losses are potentially unlimited. You probably - I hope - meant to say that you were buying the put.

There is something unlimited here, but its not losses

Three guesses what it is