Margin Requirements

In options trading, "margin" also refers to the cash or securities required to be deposited by an option writer with his brokerage firm as collateral for the writer's obligation to buy or sell the underlying security, or in the case of cash-settled options to pay the cash settlement amount, in the event that the option gets assigned.

Margin requirements for option writers are complicated and not the same for each type of underlying security. They are subject to change and can vary from brokerage firm to brokerage firm. As they have significant impact to the risk/reward profiles of each trade, writers of options (whether they be calls or puts alone or as part of multiple position strategies such as spreads, straddles or strangles) should determine the applicable margin requirements from their brokerage firms and be sure that they are able to meet those requirements in case the market turns against them.

Margin Requirements Manual

A reference manual to the margins requirements of various options strategies has been published by CBOE and is available here.

Margin Calculator

Also provided by CBOE is this useful online tool that calculates the exact margin requirements for a particular trade.

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