OptionsHouse Brokerage 2.0

In December 2006, the SEC approved Portfolio Margining for qualified customer accounts and set April 2, 2007 as the date it would go into effect. Portfolio Margining will allow qualified customer accounts to be margined in a manner similar to current Broker Dealer Haircuts. The new rules will cover all equities currently marginable under Reg. T., listed equity options, listed index options and single stock futures. A portfolio will be looked at on an underlying symbol basis and all instruments with the same underlier will be looked at as a single miniature portfolio thereby giving risk credit for offsetting positions.

The only approved methodology at this time for evaluating the risk for Portfolio Margining is the OCCs TIMS program. TIMS is used today to calculate Broker Dealer Haircuts. For equities and narrow based indexes, each position with the same underlier is "shocked" (i.e. theoretical value is recalculated) up and down 15% in 3% intervals and theoretical profits or losses are calculated. The margin for that position will be the largest loss at any one of those intervals or $37.50 per contract, whichever is greater. The same process is applied to broad based, non-high cap indexes, but the range is up and down 10% and large cap broad based indexes are shocked up 6% and down 8%. The TIMS model uses implied volatilities to determine theoretical profits and losses, so the margin on a position can change as the underlying implied volatilities change. Margin calls must be met either by depositing funds or establishing a hedge that removes the margin. Margin calls cannot be met by liquidating the position.

(OptionsHouse has the right to adjust margin requirements based on its own risk analysis, market volatility, and unusual conditions.)

For more information, to discuss your qualification status, or to begin the approval process for Portfolio Margining contact: