Helpful Information for Portfolio Margin Account Set-Up
When applying for a Portfolio Margin Account, there are a few things you will need to know in order to insure proper set up.
Check out these 20 helpful bits of information to insure a smooth enrollment.
1. You should know how to access your account information online.
2. Portfolio Margin calls are to be met the day immediately following the day of the call issuance.
3. If you are long Vega, short gamma and positive theta, you are long an At-the-Money Calendar Spread.
4. Delta measures the change in price of an option for a one point change in the underlying.
5. If you are short a stock and you want to hedge, you do NOT want to sell out of the money calls in that stock.
6. Short stock plus a short put is a synthetic short call.
7. If you short a call option for $1.00 and the delta of the call is $0.50 and the stock increases by $1.00, then the theoretical price of the options is $1.50.
8. You are short a put. If the delta is 50 cents and the gamma is 4 cents and the stock decreased by $1.00, then the new delta would be $0.54.
9. If you sell a $150 call and a $150 put and the stock at expiration is at $150, the next business day your position will be flat or you will have no position in the stock.
10. A long call is a synthetic long stock, long put position.
11. In a risk based account, when shorting options, the clearing firm may require additional margin beyond the initial margin requirement.
12. Vega measures the change in the option value for a one percent change in volatility.
13. A long put is a synthetic short stock, long call position.
14. Rho measures the change in price of an option for a one percent change in interest rate.
15. If you sell 10 - 145 Calls for $2.50 and the stock is $160 at expiration when you buy the calls back at a parity, you lost $12,500.
16. If you buy 500 - 1230 calls at $5 and 500 - 1205 puts at $6, the traditional margin requirement would be $550,000.
17. If your account is restricted to "Liquidation orders only", you are NOT allowed to place an order to open a naked option position.
18. If you are long a January 50 Put and short a December 55 Put you are long Delta and long Vega.
19. Theoretical option pricing is calculated using volatility, annual interest rate, stock price, days to expiration and the strike price.
20. Long stock and a short call is a synthetic short put.