New Option margin Rules Start Monday - YAY!

[wayneL]

... 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