13.2 Options Trading

Permission Levels and
Margin Requirements

Options trading is highly leveraged and could be extremely risky. Fortex supports 6 different levels of options trading based on an increasing scale of risk profiles. Users will be granted the appropriate permission level by their service providers. Each level has its specific initial margin requirement and maintenance margin requirement. The following is an outline:

Permission Level	Option Initial Margin Requirement	Option Maintenance Margin Requirement
Level 1 (Writing Covered Calls/Puts)	Sufficient underlying shares	Sufficient underlying shares
Level 2 (1 + Long Calls & Puts)	100% of the option premium	0%
Level 3 (Spreads)	Not Implemented Yet.	You May Skip this Level for Now.
Level 4 (1, 2 + Writing Uncovered Puts)	The greater of: 25% of the Long Market Value - out of the money amount + the premium or 15% of the Long Market Value + the premium or $500 per contract	Same as initial requirement
Level 5 (1, 2, 4 + Writing Uncovered Calls)	The greater of: 25% of the Long Market Value - out of the money amount + the premium or 15% of the Long Market Value + the premium or $500 per contract	Same as initial requirement
Level 6 (1, 2, 4, 5 + Short Index Options (Broad Based))	100% of option premium plus 20% of underlying index value less "out of the money" amount, if any, to a minimum of option precedes plus 15% of underlying index value.	100% of option premium plus 15% of underlying index value less "out of the money" amount, if any, to a minimum of option precedes plus 10% of underlying index value.

Order Entry

To enter an option order, you can either type in your order into the Option order entry panel at the bottom of the Options window, or you can simply point & click. For example, in Figure 13.2.1, to buy 1000 contracts of MSFT Put option +MSFTOK Expired March 2005 Strike 18.22 at 102.25, simply click on the Ask field of that option, the order will be automatically populated into the order entry panel at the bottom. When submitting an order, it is always important to specify whether an order is to open a position (Open) or to close a position (Close). When writing options, it is important to specify whether the order is Covered or Uncovered.

Figure 13.2.1

Month Code, Strike Code and Symbol Lookup

To look up options symbols, please go to the CBOE website http://www.cboe.com/TradTool/Symbols/SymbolDirectory.asp

Following are tables of the month code and strike price code use in option symbols.

Options Month Codes

Call	Month	Put
A	Jan	M
B	Feb	N
C	Mar	O
D	Apr	P
E	May	Q
F	Jun	R
G	Jul	S
H	Aug	T
I	Sep	U
J	Oct	V
K	Nov	W
L	Dec	X

Options Strike Price Codes

Standard Strike Price Codes
A	5	105	205	305	405
B	10	110	210	310	410
C	15	115	215	315	415
D	20	120	220	320	420
E	25	125	225	325	425
F	30	130	230	330	430
G	35	135	235	335	435
H	40	140	240	340	440
I	45	145	245	345	445
J	50	150	250	350	450
K	55	155	255	355	455
L	60	160	260	360	460
M	65	165	265	365	465
N	70	170	270	370	470
O	75	175	275	375	475
P	80	180	280	380	480
Q	85	185	285	385	485
R	90	190	290	390	490
S	95	195	295	395	495
T	100	200	300	400	500
Non-Standard Strike Price Codes
U	7.5	37.5	67.5
V	12.5	42.5	72.5
W	17.5	47.5	77.5
X	22.5	52.5	82.5
Y	27.5	57.5	87.5
Z	32.5	62.5	92.5