margin for synthetics

Discussion in 'Options' started by daniel5198, Jun 27, 2008.

  1. i have asked IB that ,but (surprise surprise) couldn't get a straight answer. I understand that long call + short stock = long put, but what would be the margin requirement for a partial synthetic- e.g.- long ATM call +short 50 underlying ??? tnx.
  2. TYtrader


    probably 100 percent for the long call and short sale proceeds plus 50 percent requirement on short stock position.
  3. moonmist


    I think this is true for a Regular T Margin account.

    For a Portfolio Margin account, the overnight margin requirement should be much lower.
  4. I don't know what the margin maintenance requirement is. But a bigger question is: How will your margin interest charge be computed? This one I can answer. Your margin debt is the daily net balance of the excess of your short stock value over your available cash at the end of the day. This interest charge is computed daily, and also compounded daily. The debit posting is at the end of the month.

    Example: Assume that at the end of the day, the margin debt is $5,000 and that the rate is 8.5%. The daily interest would be computed: $5,000 x .085/360, or $1.18. Don't be fooled by the small accumulates quickly.

    I do a lot of stock shorting and Put shorting (Covered Put Write, which I realize is a synthetic naked Call write). The good news is that the Put proceeds are part of the daily cash balance, and thus act to reduce the margin interest charge.

    Daniel, there are many reasons to retain or terminate the services of a particular broker. In my view, the responsiveness to questions is right there at the top of the list.