Trading options in Portfolio Margin account

F

fk1028

I used to trading in a regular margin account and I can only trade 60 option contracts (e.g. $1) . After I open a portfolio margin account now I can trade 600 contracts of the same option but at a much lower strike (selling puts) (e.g. $0.1) I pay more commission ($45 vs $350) but seem like it is much safer that way in the strike price aspect. The margin in the PM account is minimal as the strike price is so low.

Is this a good way to do it?

Thanks,


Frank
 
Quote from fk1028:

I used to trading in a regular margin account and I can only trade 60 option contracts (e.g. $1) . After I open a portfolio margin account now I can trade 600 contracts of the same option but at a much lower strike (selling puts) (e.g. $0.1) I pay more commission ($45 vs $350) but seem like it is much safer that way in the strike price aspect. The margin in the PM account is minimal as the strike price is so low.

Is this a good way to do it?

Thanks,


Frank
More...

I'm not sure what your question is about Customer Portfolio Margin account vs Reg-T Margin account. You should e-mail me your contact information, and we can talk about it. I'll tell you what I know.

Bob Morse
Victor Securities
rmorse@victorsecurities.com
 
Quote from fk1028:

I used to trading in a regular margin account and I can only trade 60 option contracts (e.g. $1) . After I open a portfolio margin account now I can trade 600 contracts of the same option but at a much lower strike (selling puts) (e.g. $0.1) I pay more commission ($45 vs $350) but seem like it is much safer that way in the strike price aspect. The margin in the PM account is minimal as the strike price is so low.

Is this a good way to do it?

Thanks,


Frank
More...

definitely not. in a market crash you will get wiped out unless your position is hedged.
 
Look at the SPX put option at this moment -> SXP = 1295, Friday's 1170P has 0.15 last trade. So, 2 days from expiration for a 125 SPX point away is too risky?

Frank
 
Quote from fk1028:

Look at the SPX put option at this moment -> SXP = 1295, Friday's 1170P has 0.15 last trade. So, 2 days from expiration for a 125 SPX point away is too risky?

Frank
More...

Never look at the last trade price since it is completely irrelevant. The only true indication of the current market price are the bid and ask, which in this case is 0 bid, 0.10 ask. In other words, good luck trying to sell it @ 0.15.

Portfolio margin account is definitely not for you, since you don't know the basics!
 
Quote from fk1028:

MMMnnn.. just check... 30 @ 0.05 and not 0.1...
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The problem with selling options this low is that the last .05 takes forever to come out. I have more success selling 60 days out and taking the first 50% of the decay vs. selling closer in and taking the last 50% of the decay. Gamma is lower farther out too.

With a PM account, make sure you see what your margins would be for a position at different $ values. You will find that the margin requirement will dramatically increase or decrease as you move away from current price.
 
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