There are 3 different formulas the brokerages can use when holding margin capacity against open put positions. In my sardonic view, they'll use whichever one allows them to hold the most amount of margin capacity. In addition, the closer you get to expiry, the more rapidly your puts are going to decay (which is what you want.) A bizarre counter-intuitive fact is that if the underlying increases in value and your puts become almost worthless and you are near expiry, nonetheless, the amount of margin capacity held can be substantial, even though your "position" is actually almost risk-free by that time. They will just use the value of the underlying to calculate how much is held--
So, it's not worth it to hold them under a buck. You can free up your margin capacity and do something else with it. Some people want every last dollop of profit but, heck, with May 16 coming and possible FED FUD, it ain't worth it. |
