13.2 Options
Trading
Permission Levels and Margin Requirements
Options
trading is highly leveraged and could be extremely risky. OpenEx 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 |
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: |
Same as
initial requirement |
|
Level
5 (1, 2, 4
+ Writing Uncovered Calls) |
The
greater of: |
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 chain window, or you can simply point
& click. For example, in Figure
13.2.1, to buy 1 contract of QQQ Put option +QQQOK Expired March 2003 Strike 37
at 9.40, 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
|
Options Strike Price Codes
|
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