Options contracts are margin transactions. Users need to understand the concept of Initial Margin and Maintenance Margin before trading.
- Initial Margin (IM) is the minimum margin required to open a position. Including the commission to Order IM and Position IM
- Maintenance margin (MM) is the minimum margin required to maintain the position. If the account margin falls below the maintenance margin level, the position will get liquidated.
Due to the characteristics of the options contract, buying call or put options have the right to expire and execute, and therefore long options do not require a Maintenance Margin. Short options require a Maintenance Margin to ensure that the seller can meet its obligations when the option is exercised.
Options margin calculation:
Position IM | Position MM | Order Opening IM | Order Opening MM | Order Closing IM |
Order Closing MM |
|
Buy Call | 0 | 0 | Option Order Price * Order amount + Opening Loss | 0 | 0 | 0 |
Buy Put | 0 | 0 | Option Order Price * Order amount + Opening Loss | 0 | 0 | 0 |
Sell Call |
{Option mark price + Max [(0.15 * underlying price - Moneyness), (0.1 * underlying price)]} * position amount
Moneyness = Max(0, strike price - underlying price). |
{Option mark price + Max [(0.075 * underlying price), (0.075 * option mark price)] + option liquidation fee rate * underlying price} * position amount |
{Option order price + Max [(0.15 * underlying price - Moneyness), (0.1 * underlying price)]} * Order amount + Opening Loss
Moneyness = Max(0, strike price - underlying price). |
0 | 0 | 0 |
Sell Put |
{Option mark price + Max [(0.15 * underlying price - Moneyness), (0.1 * strike price)]} * position amount
Moneyness = Max(0, underlying price - strike price). |
{Option mark price + Max [(0.075 * strike price), (0.075 * option mark price)] + option liquidation fee rate * underlying price} * position amount |
{Option order price + Max [(0.15 * underlying price - Moneyness), (0.1 * strike price)]} * Order amount + Opening Loss
Moneyness = Max(0, underlying price-strike price). |
0 | 0 | 0 |
Opening Loss = Order amount * abs {min[0, Buying/Selling Direction * (Mark Price - Order Price)]}
Buy = 1, Sell = -1
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