TOS TD Ameritrade - Portfolio Margin Test Review

M

mozung

Hey,
I recently applied for portfolio margin account at TD Ameritrade which required to pass a knowledge test. I tried the test but burned my confidence to dust in first attempt. I missed by just one question. I was not sure where I did wrong. So I'm thinking, I should consult with experts like you before submitting the test 2nd time. Can anyone please review my test and let me know if I need to research more in any question? I will really appreciate your responses.
Thanks
 

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These questions look way too difficult for majority of options traders. I’m not sure why TDA expects people to be practically experts, while I don’t even use these types of calculations while trading thousands of options a month. More basic questions would be great though, and every broker should have a basic test.
Anyway:

Re: 2
Since you’re short calls and the stock is higher at expiration then you’ve lost $15K, while gaining $2.5K on the premium you collected.

Re: 11
It doesn’t matter whether you’re short or long the call. The delta of 0.50 indicates the call “carries the weight of” 50 shares, so $1 in share price increase would increase its value by $0.50.

Re: 14
This is equivalent to 100/110 bull Call spread, which I believe has positive delta and negative Vega, so you seem to be right on this one, despite doubt from @FSU (?)
I wasn’t sure myself and had to find an example: https://www.schwab.com/resource-cen...ong-call-vs-bull-call-spread-trading-strategy
Makes sense because OTM options have higher Vega than ITM options. Again. for clarity I’ve switched sides and treating this as a bull call spread, vs bull put spread.
 
Re: 14 This is equivalent to 100/110 bull Call spread said:
@FSU[/USER] (?)
I wasn’t sure myself and had to find an example: https://www.schwab.com/resource-cen...ong-call-vs-bull-call-spread-trading-strategy
Makes sense because OTM options have higher Vega than ITM options. Again. for clarity I’ve switched sides and treating this as a bull call spread, vs bull put spread.
More...

That's why I said maybe on this. Long Jan 100 put and short Dec 110 put, would be long time spread as well, which would be long Vega?
 
Not sure either and that’s why I’m not sure who’d even use these calculations in real life. I trade more complex option combos and do look at Vega that ToS or my program can calculate for me. Otherwise I’d have to undust my calculator :)
 
The majority of option traders shouldnt be using PM,especially to have the ability to sell OTM garbage bigger than they could with Reg T..

Your assessment regarding Vega and ITM vs OTM is very loose

guru said:
These questions look way too difficult for majority of options traders. I’m not sure why TDA expects people to be practically experts, while I don’t even use these types of calculations while trading thousands of options a month. More basic questions would be great though, and every broker should have a basic test.
Anyway:

Re: 2
Since you’re short calls and the stock is higher at expiration then you’ve lost $15K, while gaining $2.5K on the premium you collected.

Re: 11
It doesn’t matter whether you’re short or long the call. The delta of 0.50 indicates the call “carries the weight of” 50 shares, so $1 in share price increase would increase its value by $0.50.

Re: 14
This is equivalent to 100/110 bull Call spread, which I believe has positive delta and negative Vega, so you seem to be right on this one, despite doubt from @FSU (?)
I wasn’t sure myself and had to find an example: https://www.schwab.com/resource-cen...ong-call-vs-bull-call-spread-trading-strategy
Makes sense because OTM options have higher Vega than ITM options. Again. for clarity I’ve switched sides and treating this as a bull call spread, vs bull put spread.
More...
 
hi taowave- you should know that FINRA specifically designed PM for hedging and for the use of options to provide market maker type risk based margin for experienced traders. https://www.finra.org/rules-guidance/key-topics/portfolio-margin/faq

taowave said:
The majority of option traders shouldnt be using PM,especially to have the ability to sell OTM garbage bigger than they could with Reg T..

Your assessment regarding Vega and ITM vs OTM is very loose
More...
 
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