Margin requirements vary by option type. Brokers require investors to deposit margin funds because they may be needed to buy or sell underlying stocks if the options are exercised. They may also be needed to close losing trading options on margin minder. They are subject to change and can vary from brokeragefirm to brokerage firm. Suppose you buy some stock options. You will risk much less money than you would if you bought the shares or sold the stock short, but you stand to make just as much profit.
The catch is that your risks are much greater. For some types mindrr options transactions, your risk is unlimited. For options trades with unlimited risk you must have a margin account. The Nature of OptionsOptions are contracts in which ttrading buyer may purchase or sell a security such as shares of a stock for a guaranteed amount called the strike price. The buyer may exercise the option at any time until the date it expires but is not obligated to do so.
The seller of the contract is called the option writer. The writer is obligated to fulfill the option contract if it is exercised. tracing When you trade options, teading may buy contracts or you may write them. Losses can exceed your deposits and you may be required to make further payments. frading These products may not be suitable for all clients therefore ensure you understand the risks and seek independen.