Short Uncovered Call: Equity Options

Greater of:

20% of the underlying stock price – the out of the money amount (if there is any) + option premium x number of contracts

Or

10% of the underlying stock price + option premium x number of contracts

(premium received from the sale of short call(s) may be applied to meet the initial margin requirement)

Example:

Sell to open 10 contracts Feb 46 Call at .85 and underlying stock is at 44.66

[(.20 x 44.66) – 1.34 + .85] x 10 x 100 = $8,442

Or

[(.10 x 44.66) + .85] x 10 x 100 = $5,316

Margin requirement of $8,442 applies because it is the greater margin requirement

Continued maintenance margin requirement apply using the same formulas. The maintenance margin requirement may increase or decrease. Some symbols may have elevated margin requirements and may have a special requirement figure higher than 20%.

This strategy may have a minimum account value requirement beyond the calculated option requirement.  This value is determined by the Risk Department and is subject to change at any time.

The market values and margin rates used to compute the initial and maintenance margin scenarios utilize OptionsHouse house standards. Higher margin rates may be utilized when calculating these scenarios.

The amount of money you can borrow on margin toward the purchase of securities is typically limited to 50 percent of the value of marginable securities in your account. However, it is prudent to borrow less to minimize risk.

Once you borrow on margin, you are required to maintain a certain amount of equity in your account, depending on the securities you hold. Typically, the equity maintenance requirement is at least 30% of the total account value, but it can be higher for certain securities or accounts.

Margin loans may be established by our clearing firm, Apex Clearing Corporation (“Apex”), in its sole discretion regardless of the amount of collateral delivered to Apex, and Apex may change such minimum and maximum amounts from time to time without notice to our customers.

In the interest of ensuring the continued safety of our clients, Apex may, without notice, modify certain margin policies to adjust for volatility in financial markets. The changes will promote reduction of leverage in client portfolios and help ensure that clients’ accounts are appropriately capitalized.