Understanding Haircuts

M

maae10

I have been trading options successfully for the last three years on the side and decided to make a career of it.

I'm a little confused however by the "haircut" margin. What is the typical haircut % that most props offer?

If one is selling options does the premium you receive count towards your maintenance requirement?

Is there an article or website that can further educate me about this?
 
Quote from maae10:

Huh? My friend trades for a place that gives him margin on options. I'm thinking about joining him.
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Which firm? Why don't you ask your friend?
 
My friend doesn't trade options, he trades stocks and they give him 6X margin. He isn't familiar with how the margin works on option trades.

He also mentioned that he isn't hindered with Reg T laws and keeps over night positions with margin all the time. Not sure why or how.
 
This is risk-based margin you are talking about, similar to SPAN for futures/options. There have been several threads about this, and I will defer to Maverick as the expert on this.
 
I got the basic understanding of how it works. I'm just not sure what happens if you sell an option and the strike price is more then 15% away.

From what I understand there is a $25 per contract minimum but what if the premium you receive covers the minimum?
 
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