At Lafferty, we allow clients to trade at exchange minimum margins to give option traders the most leverage on their money possible.

Please find below a list of our margin requirements along with some examples.

Long Option Position
Must be paid for in full.

Uncovered Equity
*includes narrow-based indices

The greater of 1) or 2):
1)       20% of stock value, less any out-of-the-money amount;
2)       10% of stock value

Accounts must have equity of at least $25,000 to write uncovered options

EXAMPLE:   IBM = 101. Sell 1 Call IBM Oct 115 at ˝
CALCULATION:   1)  20% of IBM      101 x .20  =  20.2
               less out-of-money amt       115 – 101 =  14
                                                                          ------
                                                                          6.2 x $100  =  $620
                          2)  10% of IBM   101 x .10  =  10.1 x $100  =  $1,010

The Greater Figure of $1,010 Is The Cash Requirement

Uncovered Index* 
*broad based indices only

The greater of 1) or 2)
1)       15% of index value, less any out-of-the-money amount;
2)       10% of index value

Accounts must have equity of at least $25,000 to write uncovered options

EXAMPLE:   OEX = 350. Sell 1 Call OEX Aug 360 at 2
CALCULATION:   1)  15% of OEX        350 x .15  =  52.5
                   less out-of-money amt     360 – 350 =  10
                                                                            ------
                                                                            42.5 x $100  =  $4,250
                          2)  10% of OEX  350 x .10  =  35  x $100  =  $3,500

The Greater Figure of $4,250 Is The Cash Requirement

Debit Spread

The net debit of the spread.

EXAMPLE:  Buy 1 Call OEX Sep 375  at 5
                  Sell 1 Call OEX Sep  380  at 3
CALCULATION:
Buy premium               5
Less  Sell premium      3
                                 ----
                                  2  x  $100  =  $200 Cash Requirement

Credit Spread

The difference in strikes, less the net proceeds

EXAMPLE:  Buy 1 Call XMI Aug 640  at  6
                  Sell 1 Call XMI  Aug 630  at  12
CALCULATION:
Difference in strikes  640 – 630  =  10
Less net proceeds                         6
                                                  -----
                                                    4  x  $100  =  $400  Cash Requirement

DISCLAIMERS:

R.F. Lafferty & Co., Inc. reserves the right to reset maintenance requirements when market conditions require it or if there is an undue concentration of securities in one account.

OPTION TRADING INVOLVES A HIGH DEGREE OF RISK AND IS NOT SUITABLE FOR ALL INVESTORS.

The potential loss of uncovered writing is unlimited. Please read and understand the Risk Disclosure Document entitled "Characteristics and Risks of Standardized Options"

When using margin in a option account or stock account, there is the possibility for significant losses that could be larger than your initial investment. Please read the risk disclosure document or request additional margin information before using margin in any trading account.