Minimum requirements for selling naked options on the ASX200?

[Craglet]

Hi there,

Just a quick newbie question about brokers and selling naked options on the asx200.

If I were to sell OTM (say 10% OTM) naked options on the asx200 what would be the minimum requirements I would need to meet before a broker would carry out my order?

For example, would they require that I have a certain amount of capital in my trading account? Or would they require that I have a certain amount of collateral (eg. house)?

I'm sure it would vary from broker to broker.

Thanks,
Paul

 

[Fox]

Re: Min requirements for selling naked options on the ASX200

If I were to sell OTM (say 10% OTM) naked options on the asx200 what would be the minimum requirements I would need to meet before a broker would carry out my order?

The margin required for writing an option is calculated daily by the ASX. See the following link for details.
http://www.asx.com.au/products/options/trading_information/margins.htm

The collateral required to cover your written option is typically derived/calculated from the margin put out by the ASX.

For example, would they require that I have a certain amount of capital in my trading account? Or would they require that I have a certain amount of collateral (eg. house)?

Collateral can be in the form of cash or shares you own. It varies from broker to broker.

I'm sure it would vary from broker to broker.

You are correct. I recall one of the first online stockbrokers, Sanford Securities, requiring 50% of the underlying as collateral for writing a put option. Say if you wanted to write a put option against 1000 CBA shares trading at $50, you will need $25K sitting in your Sanford trust account.

Commsec will use the margin from ASX and double it. With commsec, collateral can be in the form of cash or shares held in your account. Using the CBA shares above as an example, this will be a lot less than $25K.

Interactive Brokers use the margin from ASX to determine collateral as well. However, they also use a much more stringent margin calculation known as RegT margin, if your position is held overnight. RegT margins are much larger than ASX margins.

All the best and happy trading, Paul.