# New Option margin Rules Start Monday - YAY!



## wayneL (1 April 2007)

... but only in the US, sorry ASX option traders.

Option margin on stock options will now be given similar treatment to futures options (which operate under the SPAN system)

A few examples

COVERED WRITE

Position
Long 500 IBM @ $91.25
Short 5 calls IBM APR 95 @ $ 2.78

Old margin is 50% of stock less the short option premium or $21,422.50
New Portfolio margin requirement is $5,504.00

PROTECTIVE PUT

Position
Long 500 IBM @ $91.25
Long 5 puts IBM APR 90 @ $ 2.50
Old Strategy margin is 50% of stock plus full payment for put or $24,062.50
New Portfolio margin requirement is $1,878.00

NON-CONFORMING DEBIT SPREAD

(Long must expire on or after short)
Position
Long 50 calls IBM APR 90 @ $5.45
Short 50 calls IBM JUL 100 @ $2.28
Strategy margin requires full payment for long option and
appropriate margin on short option position or $74,750.00
New Portfolio margin requirement is $14,106.00

SYNTHETIC STRADDLE

Position
Long 1000 IBM @ $90.00
Long 20 puts IBM APR 90 @ $ 3.65
Old Strategy margin is 50% of stock plus full payment for put or $52,300.00
New Portfolio margin requirement is $7,300.00


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