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Strategies & Market Trends : Options 201: Beyond Obi-Wan-Kenobe
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To: Dominick who wrote (982)4/18/2004 11:36:39 PM
From: Dan Duchardt  Read Replies (1) of 1064
 
You have already gotten good input on this, but just to add a bit-

The typical margin requirement for shorting options is 20% of the underlying plus premium received for stocks, and 15% of the underlying plus premium received for index options. Many brokers will reduce that by any amount the option is out of the money down to a minimum of about 10% of the underlying.

So even with daytrading margins, it could be possible in theory to generate a margin call through assignment. For an account that has insufficient funds to daytrade, you could have a daytrading violation anyway if normal daytrding rules applied. It is my impression that brokers who automatically liquidate positions instead of issuing margin calls are permitted to operate that way without collecting money from clients when their accounts fall below margin mimimums. With such brokers, you do not have the choice of sending money to maintain a postion you have taken. I don't know how OptionsXpress operates, but if they automatically liquidate any assigned positions, they may be at least under the radar if not technically in compliance.

I've never heard of anyone being charged a daytrade for having an assigned position liquidated on the day it was opened. I wonder if anyone has run into that.
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