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Strategies & Market Trends : Margin Calls - Share The Pain

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To: daffodil who started this subject	11/30/2000 10:28:55 PM
From: daffodil	Read Replies (2) of 158

How to calculate margin on long options This is easy, since most options have a 100% requirement and 0% loan value. In other words, you must pay for them in full. I can pay for them with cash or SMA. When I sell them, their full sale value is added to my SMA. However, in January 2000 the NYSE permitted LEAPS with remaining time in excess of 9 months to have 25% loan value. This change was adopted by the CBOE and just recently the SEC has approved the NASD's rule change, although the NASD's Notice to Members hasn't yet been published. Not all firms have adopted the change; and remember, if the firm's requirements are higher than the NASD/NYSE's, the firm's requirements prevail. If you're interested in margining LEAPS, be sure to ask your firm what their requirements are.

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