Options Strategies - Portfolio Margin
Option strategies benefit greatly from portfolio margin. In many cases, the margin requirement can be orders of magnitude lower than under the traditional Reg-T strategy based margin. The methodology used to calculate portfolio margin for options works by grouping options on the same underlying together and stress testing the underlying across a range of hypothetical market moves. In addition, the methodology allows for options on similar ETFs or indexes to offset each other. This can further reduce the margin requirements for options on indexes or ETFs.
The following document shows the difference between the traditional Reg-T margin requirement versus the margin requirement under Portfolio Margin.
The document is split into two sides. The left side shows the margin requirements for options on individual stocks (which receive a -15% to +15% shock) and the right side shows the margin requirement for options on broad based index ETF's (which receive a shock of -8% to +6%).
The document is split into two sides. The left side shows the margin requirements for options on individual stocks (which receive a -15% to +15% shock) and the right side shows the margin requirement for options on broad based index ETF's (which receive a shock of -8% to +6%).