My account is almost at the point where it can have portfolio margin, so I want to make sure I understand it properly before using it.
As I understand it now, Reg T evaluates each position individually and simply sums the margin requirements.
Portfolio Margin, however, evaluates the portfolio as a whole (as the name implies). This means that all options on an underlying are evaluated together instead of separately.
Am I correct also that stocks with strong correlations are also evaluated together? That may be a stretch, but just asking, and based on what metrics? Simple historical correlation?
Also, long options in a Reg T cannot be used as collateral, but they can in Portfolio Margin? Does this mean that a Poor Man's Covered Call has different margin requirements under Reg T vs. Portfolio? Right now if I buy a LEAP and sell a short-term call, the long call counts against my liquidity and the short-term call counts against my margin, but under Portfolio Margin, the short-call should count significantly less against my margin because of my hedged exposure with the LEAP?
As I understand it now, Reg T evaluates each position individually and simply sums the margin requirements.
Portfolio Margin, however, evaluates the portfolio as a whole (as the name implies). This means that all options on an underlying are evaluated together instead of separately.
Am I correct also that stocks with strong correlations are also evaluated together? That may be a stretch, but just asking, and based on what metrics? Simple historical correlation?
Also, long options in a Reg T cannot be used as collateral, but they can in Portfolio Margin? Does this mean that a Poor Man's Covered Call has different margin requirements under Reg T vs. Portfolio? Right now if I buy a LEAP and sell a short-term call, the long call counts against my liquidity and the short-term call counts against my margin, but under Portfolio Margin, the short-call should count significantly less against my margin because of my hedged exposure with the LEAP?
