All Questions
18
questions
2
votes
2
answers
298
views
Mathematically precise explanation of buying power
Can someone please provide a mathematically precise description of how buying power works in a brokerage account? Everything I can find online is too dumbed down to be precise enough that you could ...
- 685
0
votes
0
answers
53
views
Futures Options: Options Expiration vs. Underlying Delivery
Does the expiration of a futures option always determine the delivery date of the underlying, in particular does the option always expire into the earliest-delivering futures contract?
For example, /...
1
vote
1
answer
146
views
Covered call buy-to-close using sale of underlying?
If I write a covered call, my account will be long the underlying and short a call. Say I withdraw the premium from my brokerage account and spend it, invest it elsewhere, etc.
If I want to later sell ...
2
votes
1
answer
272
views
What are the situations that could cause unlimited liability in my stock brokerage account?
I have a stock brokerage account, and I want to make sure that the things I do in it will not cause me to be liable for more than the amount I put into the brokerage account. My question is: under ...
- 17.1k
4
votes
2
answers
5k
views
Why are vertical option spreads level 3, requiring margin?
Why are vertical spreads (e.g., buying a call at one strike and selling a call at another strike, at the same expiration date) classified as "Level 3" options strategies, therefore requiring margin?
...
- 222
5
votes
3
answers
3k
views
Sold a bullish vertical credit spread and was assigned early. Need information about a margin charge
Recently I was assigned on a short deep in-the-money put. It created a huge margin call. I called the broker the following day to exercise my long put to flatten out the position. He did that ...
- 51
1
vote
1
answer
241
views
Why are my funds locked up in my trading account while using bear put strategy?
Today I used a bear put strategy and I was surprised to see that some funds in my trading account were locked up as margin used. It is well known that the potential loss in bear put strategy is ...
1
vote
1
answer
1k
views
No margin account and put expires ITM
This question is a followup to a recent and similar question on buying a put: When a long PUT expires in-the-money, whose shares are being sold?.
Suppose I don't have a margin account, and I buy a ...
- 506
1
vote
3
answers
5k
views
I was denied a margin account for being unemployed, what should I do?
I'm in Canada, and encountered something very strange in the last few months: my mother and I each opened an individual (not joint) discount brokerage account at HSBC InvestDirect. We both deposited $...
- 417
3
votes
3
answers
4k
views
Why is a margin account required for limited risk spreads?
If I try enter a limit order for an options spread I am denied being able to make this trade due to not having a margin account. Why? I'm not borrowing any money to make the trade, it's all in cash. ...
user12515
1
vote
0
answers
207
views
How to consider the effect of margin call risk in a gamma scalping strategy
I am trying to tippy toe into volatility trading and volatility strategies.
So I was reading Sheldon Natenberg where he starts off with a portfolio of long ATM call and short 50 shares of stock to ...
- 16k
1
vote
1
answer
3k
views
How many naked option contracts can I write if I want to use maximum margin
Let us say I want to write a naked option on SPX in my interactive brokers margin account. If this is the only position I wish to hold in my account, and I want to use maximum margin, then what is the ...
- 16k
1
vote
2
answers
6k
views
Are option contracts subject to mark to market rules
When I buy or sell an option contract, am I subject to futures style mark to market rules...i.e if the position moves against me, will the broker issue a margin call to put up additional collateral, ...
- 16k
4
votes
3
answers
3k
views
What would the broker do about this naked call option?
Let's say there is a stock of ABC currently at $8, and I sell a (naked) call option on it, with a strike price of $10 and expiration in two months. Suppose my broker lets me do this if I have 50% of ...
8
votes
2
answers
5k
views
Do the proceeds from selling an option immediately convert to buying power in a margin account?
In a cash account, the proceeds from the sale of any security will be held until settlement; for options, this is effectively overnight. One can sell an option on one day, and then use the funds the ...
- 566