Please read Characteristics and Risks of Standardized Options prior to investing.

US to US Options Margin Requirements

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The firm requires one owner to set up subaccounts within their account and we are required to verify the identity of that account owner. At TradingBlock , we strive to maintain minimum margin requirements to help our clients maximize their portfolio buying power. Please review the table below for additional information on our margin requirements.

Trading FAQs: Margin - Fidelity

Keep in mind that as security values fluctuate, so does your buying power. Available to trade without margin impact: This balance represents any free cash available in the account. Staying within this balance should help ensure that you are not creating a margin loan subject to margin interest. This balance uses your cash and margin surplus from any margin-eligible securities already in the account, which means you can create a margin loan and borrow against those other positions to buy something that isn't margin-eligible. You will pay margin interest and be subject to margin calls.

Trading with margin

However, if the trade creates a concentrated position or the security isn't fully marginable, you will typically have a higher security requirement. Intraday buying power: This balance is the amount available for day trading a long, fully marginable position. We suggest that you use the Margin Calculator to understand security-specific margin requirements to avoid exceeding this balance and creating a margin or day trade call. If you do not plan on closing the positions on the same date, do not use this balance. Due to the increased leverage, attempting to hold this overnight can result in the margin call being accelerated and becoming due immediately.

For detailed information, see Day trading under Trading Restrictions. With the Margin Calculator, you can:. Day trading is defined as buying and selling the same security—or executing a short sale and then buying the same security— during the same business day in a margin account.

Pattern day traders, as defined by FINRA Financial Industry Regulatory Authority rules must adhere to specific guidelines for minimum equity and meeting day trade margin calls. For more information, see Day trading under Trading Restrictions. Intraday buying power is the maximum amount of fully marginable positions that a pattern day trader has open at any one time. Using the intraday buying power balance to open a position and hold it overnight increases the likelihood that a margin call is issued and due immediately.

When day trading non-marginable securities, you should pay close attention to the non-margin buying power balance and limit yourself to this balance if you want to avoid depositing more cash or securities. Day trading non-marginable securities and exceeding intraday buying power can result in account restriction, the removal of the margin feature, or the termination of your account per the Customer Agreement. Fidelity monitors accounts and we conduct reviews throughout the day. If your account requires attention, you may receive an alert indicating that you must take immediate action.

You should be aware of the risks involved when you use your intraday buying power balance and be prepared to deposit cash or marginable securities immediately. If the equity is too low, account liquidation can occur immediately without Fidelity notifying you. When your account is diversified—that is, you invest in different securities and different industries—the House requirements are optimal. House requirements are more dynamic because your broker Fidelity sets them and they depend on many factors. Keep in mind that the requirement might be higher based on certain factors.

The same logic applies if you have different securities in the same industry. In this example, notice the LNG holding in a diversified portfolio vs. House requirements are reviewed systematically based on volatility, concentration, industry and liquidity levels and can be viewed in the Margin Calculator. On some occasions, the House requirements are deemed insufficient for the leverage in the account and raised to adequately cover the risk.

It is very important to review your margin account daily and become familiar with the House requirements for your account. There are other reasons why requirements can be adjusted. As mentioned before, anything that has a higher Exchange requirement will have a higher House requirement, such as leveraged or inverse ETFs, IPOs, mutual funds, and iShares. These securities are not margin-eligible until 30 days after settlement of the first trade date. Typically, when an account is concentrated in one specific equity position, a concentration add-on will increase the house requirement based on a tiered schedule.

In certain cases, the position may benefit from a reduced house requirement based on the volatility of the security. To maintain the lower requirement, the concentrated position must meet the standards based on volatility. If the position fails to meet this standard, the house requirement may be increased again to align with the normal concentration add-on. Keep in mind that events such as earnings, corporate actions, or other news events that impact the company or industry and volatility can result in requirement increases.

To remove the day-trader classification, you must go 60 days without completing a day trade. Margin requirements are intended to help protect securities firms and their customers from some of the risks associated with leveraging investments by requiring customers to either meet or maintain certain levels of equity in their account. Fidelity provides the margin maintenance requirement for all securities held in your account. Fidelity also provides the ability for you to enter symbols to retrieve the maintenance requirement for securities not held in your account, as well as evaluate the impact of hypothetical trades on your account balances using our Margin Calculator.

Maintenance requirements may vary by account and may be subject to RBR add-on requirements in addition to the base requirements. Note: Fidelity may impose a higher house maintenance requirement than the Fed requirement or Reg T. In a situation where the maintenance requirement is the greater of the 2, you must maintain an equity level at or above the higher requirement. Low-price security requirements govern all accounts with equity or mutual funds.

Add-ons are not mutually exclusive and a single position could have multiple add-ons. Maintenance requirements are calculated using rules-based requirements in which the RBR add-ons are added to the base requirements. A majority of securities have base requirements of:.

Margin Requirements

There may be instances where securities have higher base requirements. Some examples are distressed sectors, distressed issuers, and levered ETFs. If there is no underlying stock in the account, the full exercise value of the short put must be in the cash account. Looking to place uncovered options trades?

Then you must have a margin agreement and be approved for the appropriate options level:. Options spread requirements Nonretirement accounts require the following account agreements and equity requirements before placing any spreads:.

The margin requirement for debit spreads in a nonretirement account is the initial debit paid to execute the trade. Retirement accounts require the following account agreements and equity requirements before placing any spreads:. There are a few balances that can apply to options trading.

Real-time: Balances display values that change with market price fluctuations on the underlying securities in your account. Essentially, it is a complete recalculation based on price fluctuations of positions, trade executions, and money movement into or out of the account. Intraday: Balances reflect trade executions and money movement into and out of the account during the day.

Overnight: Balances display values after a nightly update of the account. In some cases, certain balance fields can only be updated overnight due to regulatory restrictions.

US Options Margin Requirements

Equity options are not settled in cash. If your account cannot support the underlying position that the option contract s represent, the contract s can be liquidated or blocked from being exercised. This request is only possible with long, unpaired options and helps prevent account liquidation for the option. You should never trade into margin calls without planning to make a deposit of cash or marginable securities.

You should avoid selling options into expiration with the intent to expire out of margin calls. The size of the margin call can cause an accelerated margin call, which might result in account liquidation. Each contract still has a base house requirement. So even though the option is unlikely to be assigned, there is still a significant charge to margin per contract and this requirement is expected to be met at the time of trade execution. When an option is exercised, the resulting position is maintained in your account until we receive further instructions from you.

However, if a position cannot be maintained for example, if it would result in a short position in a retirement account, or result in an equity level that is below the required minimum, or if there are no shares available for a short sale , we will liquidate the position at your sole risk and will charge you 2 commissions. If an option assignment results in a short equity position in your account, you might be charged short interest fees to maintain that position.

When an option is exercised, you will be charged the full aggregate exercise price for any underlying security. Day trading option strategies, such as spreads, butterflies, or condors, have lower day trade requirements if the positions are opened and closed as the same strategy on the order ticket. Your positions—whenever possible—are paired or grouped as strategies on the same order ticket, which can reduce your margin requirements. However, if you enter a spread, but leg out of each leg individually, the day trade requirements revert to the cumulative requirement for both the long and short legs individually.

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