Net Liquidating Value (NLV) less than $2,000 to start the trading day

If a margin account starts the day under the required threshold for a certain strategy (including spreads), that strategy will be considered restricted for that day. Note: SOD = Start of Day

Below are the current thresholds:

  • Spreads require $2,000 in SOD NLV
  • Naked puts require $4,000 in SOD NLV
  • Naked equity calls require $15,000 in SOD NLV
  • Naked index calls require $50,000 in SOD NLV

Accounts which start the day with less than $2,000 NLV will be unable to place any new opening spreads, or enact any trade in a symbol which will increase existing margin requirements. Accounts with existing spreads that start the day with less than $2,000 NLV will be messaged that there is a restricted position in the account, and they will have, at most, three days (including the day of the message) to eliminate the restriction by taking one, or a combination of, the following actions:

  • A deposit of funds or securities into the account that brings your account value above the requirement,
  • Market appreciation,
  • Liquidation of the offending position(s) when applicable

OptionsHouse Margins Department will take market action on the day following the notice date to liquidate any and all restricted positions. Liquidations made by the Margins Department will incur a $25 broker assist fee.

Margin Equity less than $2,000 to start the trading day

If a margin account’s SOD Reg-T Equity finishes below $2,000 at the close of business the prior business day:

  • Account will be prohibited from Selling to Open (STO) equity orders.
  • Margin requirements will be raised to 100% for equities (both current positions and order vetting).
  • Overnight (margin) buying power will be lowered from 2X to 1X.
  • Day trading buying power will be lowered from 4X to 1X.

Short puts will be margined as Cash Secured (100% requirement) for margin accounts not approved for uncovered options.

Calendar spreads and diagonal spreads are not allowed in Cash Settled Indexes (SPX, RUT, NDX, etc.)

Spreads of any kind are not allowed in American-style Cash Settled indexes (OEX)

OptionsHouse Fed Call Policy and Liquidation Strikes

Liquidation strikes are issued to accounts liquidating positions entered into without having sufficient funds to meet the initial requirement (Fed call). Please note that no strike will be issued when liquidating a position resulting from exercise or assignment on the first business day following the exercise or assignment.

Restrictions are placed on accounts for generating Liquidation Strikes and are based on the number of Reg-T liquidation strikes in a rolling 12-month period.  The restrictions are as follows:

  • First Liquidation Strike – Strike Issuance
  • Second Liquidation Strike – Strike Issuance, Increased Margin Requirements for 30 Days
  • Third Liquidation Strike – Strike Issuance, Increased Margin Requirements for 90 Days
  • Fourth Liquidation Strike – Strike Issuance, Liquidations Only (LO) for 90 Days
  • Fifth Liquidation Strike – Strike Issuance, Liquidations Only (LO) for 90 Days

Accounts set to Liquidations Only (LO) are reset to 0 strikes once the 90-day period has expired.