1. Covered Call
1.1 Definition
Long Stock + Short Call, and the quantity of the underlying stock is same as the contract size of the call option
1.2 Margin Requirement
Long Stock Margin
1.3 Buying Power Requirement
• If you open a
covered call position by placing a two-leg order, the buying power required will be the trading fees plus the amount of margin calculated using the above formula;
• If you hold enough shares of the underlying stock and then sell to open a call option, the sell short order of
options will also apply the margin reduction with no buying power required.
Note: If no margin reduction is applied, it may be caused by your holding insufficient shares or your operation of closing position in the underlying stock.
2. Covered Put
2.1 Definition
Short Stock+Short Put, and the quantity of the underlying stock is same as the contract size of the put option
2.2 Margin Requirement
Short Stock Margin + In-The-Money Amount of Short Put
2.3 Buying Power Requirement
• If you open a covered put position by placing a two-leg order, the buying power required will be the trading fees plus the amount of margin calculated using the above formula;
• If you hold the short position of the underlying stock and then sell to open an
out-of-the-money put option by placing a single-leg option order, the single-leg option order will also apply the margin reduction with no buying power Requirement.
• If you hold the short position of the underlying stock and then sell to open an in-the-money put option by placing a single-leg option order, the single-leg option order will also apply the margin reduction and release an amount of buying power after the order submitted.
Note: If no margin reduction is applied, it may be caused by your holding insufficient shares or the operation of closing position in the underlying stock.
3. Vertical Spread
3.1 Definition
• Vertical Call Spread: Long Call + Short Call (same
expiration date, same underlying stock, same contract size)
• Vertical Put Spread: Long Put + Short Put (same expiration date, same underlying stock, same contract size)
3.2 Margin Requirement
• Vertical Call Spread: Market Value of Long Call + Max(Long Call Strike – Short Call Strike, 0) X Contract Size
• Vertical Put Spread: Market Value of Long Put + Max(Short Put Strike – Long Put Strike, 0) X Contract Size
3.3 Buying Power Requirement
• If you open a vertical spread position by placing a two-leg order, the buying power required will be the trading fees plus the amount of margin calculated using the above formula;
• If you hold a long position of call(put) and then sell to open a call(put) with a higher(lower) strike price, the short sell order of call(put) will also apply the margin reduction with no buying power required;
• If you hold a long position of call(put) and then sell to open a call(put) with a lower(higher) strike price, the short sell order of call(put) will also apply the margin reduction and release an amount of buying power after the order submitted;
Note:
If no margin reduction is applied, it may be caused by your holding insufficient long options, your operation of closing the long option position, or a different contract size.
4. Straddle
4.1 Definition
• Long Straddle: Long Call + Long Put (same expiration date, same strike price, same underlying stock, same contract size)
•
Short Straddle: Short Call + Short Put (same expiration date, same strike price, same underlying stock, same contract size)
4.2 Margin Requirement
• Long Straddle: Market Value of Long Call + Market Value of Long Put
• Short Straddle: Max (Short Call Margin, Short Put Margin)
4.3 Buying Power Requirement
If you open a straddle position by placing a two-leg order, the buying power required will be the trading fees plus the amount of margin calculated using the above formula.
5. Strangle
5.1 Definition
• Long Strangle: Long Call + Long Put (same expiration date, same underlying stock, same contract size, Put Strike < Call Strike)
• Short Strangle: Short Call + Short Put (same expiration date, same underlying stock, same contract size, Put Strike < Call Strike)
5.2 Margin Requirement
• Long Strangle: Market Value of Long Call + Market Value of Long Put
• Short Strangle: Max (Short Call Margin, Short Put Margin)
5.3 Buying Power Requirement
If you open a strangle position by placing a two-leg order, the buying power required will be the trading fees plus the amount of margin calculated using the above formula.
6. Collar
6.1 Definition
• Long Collar: Long Stock + Long Put + Short Call (same expiration date, same underlying stock, Put Strike < Call Strike);
• Short Collar: Short Stock + Short Put + Long Call (same expiration date, same underlying stock, Put Strike < Call Strike);
6.2 Margin Requirement
• Long Collar: Long Stock Margin + Market Value of Long Put
• Short Collar: Short Stock Margin + Market Value of Long Call + In-The-Money Amount of Short Put
6.3 Buying Power Requirement
If you open a collar position by placing a three-leg order, the buying power required will be the trading fees plus the amount of margin calculated using the above formula;
Note: If no margin reduction is applied, it may be caused by your holding insufficient shares or your operation of closing position in the underlying stock.
