Buying Options On: Margin

In a traditional stock trade, Regulation T typically allows you to borrow up to 50% of the purchase price. Options differ significantly:

Collateral to ensure you can fulfill the obligation if assigned. buying options on margin

The term "margin" in options trading refers to two distinct scenarios: Requirement Purpose Buying (Long) Usually 100% of premium (except LEAPS). Payment for the contract. Selling (Short) Varies (Initial + Maintenance). In a traditional stock trade, Regulation T typically

Options with more than 9 months to expiration are often marginable. You may be allowed to borrow up to 25% of the cost, meaning you must put up an initial margin of 75%. In a traditional stock trade

Using margin to trade options introduces layers of risk beyond standard cash trading: