Futures trading initial margin
Participants in a futures contract are required to post performance bond margins in order to open and maintain a futures position. Futures margin requirements are set by the exchanges and are typically only 2 to 10 percent of the full value of the futures contract.
Margins are financial guarantees required of both buyers and sellers of futures contracts to ensure that they fulfill their futures contract obligations. Before a futures position can be opened, there must be enough available balance in the futures trader's margin account to meet the initial margin requirement.
LAT - Short Course
Upon opening the futures position, an amount equal to the initial margin requirement will be deducted from the trader's margin account and transferred to the exchange's clearing firm. This money is held by the exchange clearinghouse as long as the futures position remains open.
The maintenance margin is the minimum amount a futures trader is required to maintain in his margin account in order to hold a futures position.
The maintenance margin level is usually slightly below the initial margin. If the balance in the futures trader's margin account falls below the maintenance margin level, he or she will receive a margin call to top up his margin account so as to meet the initial margin requirement.
TradeStation Account & Margin Requirements for Futures
Buying straddles is a great way to play earnings. Many a times, stock price gap up or down following the quarterly earnings report but often, the direction of the movement can be unpredictable.
For instance, a sell off can occur even though the earnings report is good if investors had expected great results If you are very bullish on a particular stock for the long term and is looking to purchase the stock but feels that it is slightly overvalued at the moment, then you may want to consider writing put options on the stock as a means to acquire it at a discount Also known as digital options, binary options belong to a special class of exotic options in which the option trader speculate purely on the direction of the underlying within a relatively short period of time Cash dividends issued by stocks have big impact on their option prices.
This is because the underlying stock price is expected to drop by the dividend amount on the ex-dividend date As an alternative to writing covered calls, one can enter a bull call spread for a similar profit potential but with significantly less capital requirement. In place of holding the underlying stock in the covered call strategy, the alternative Some stocks pay generous dividends every quarter.
You qualify for the dividend if you are holding on the shares before the ex-dividend date To achieve higher returns in the stock market, besides doing more homework on the companies you wish to buy, it is often necessary to take on higher risk.
How Futures Margins Work for Daytraders and Position Traders
A most common way to do that is to buy stocks on margin Day trading options can be a successful, profitable strategy but there are a couple of things you need to know before you use start using options for day trading Learn about the put call ratio, the way it is derived and how it can be used as a contrarian indicator Put-call parity is an important principle in options pricing first identified by Hans Stoll in his paper, The Relation Between Put and Call Prices, in It states that the premium of a call option implies a certain fair price for the corresponding put option having the same strike price and expiration date, and vice versa In options trading, you may notice the use of certain greek alphabets like delta or gamma when describing risks associated with various positions.
They are known as "the greeks" Since the value of stock options depends on the price of the underlying stock, it is useful to calculate the fair value of the stock by using a technique known as discounted cash flow Stocks, futures and binary options trading discussed on this website can be considered High-Risk Trading Operations and their execution can be very risky and may result in significant losses or even in a total loss of all funds on your account.
You should not risk more than you afford to lose. Before deciding to trade, you need to ensure that you understand the risks involved taking into account your investment objectives and level of experience.
Information on this website is provided strictly for informational and educational purposes only and is not intended as a trading recommendation service. Toggle navigation The Options Guide.
Home current Binary Options new! Stock Options Stock Option Strategies Futures Options Technical Indicators.
Ready to Start Trading Futures? To buy or sell futures, you need a broker that can handle futures trades. Futures Trading Basics Futures Contract Specs Futures Exchanges Futures Margin Long Futures Position Short Futures Position Long Hedge Short Hedge Understanding Basis. Options on Futures Synthetic Long Futures Synthetic Long Futures Split Strikes Synthetic Short Futures Synthetic Short Futures Split Strikes.
Crude Oil Futures Heating Oil Futures Gasoline Futures Natural Gas Futures Kerosene Futures Ethanol Futures Coal Futures Uranium Futures. Gold Futures Silver Futures Platinum Futures Palladium Futures Aluminum Futures Copper Futures Zinc Futures Lead Futures Nickel Futures Tin Futures.
Corn Futures Soybeans Futures Wheat Futures Oats Futures Rice Futures Rapeseed Futures.
Futures Markets Margin
Coffee Futures Cocoa Futures Cotton Futures Sugar Futures Rubber Futures. Live Cattle Futures Feeder Cattle Futures Lean Hogs Futures Pork Bellies Futures. Arbitrage Bearish Bullish Neutral - Bearish on Volatility Neutral - Bullish on Volatility Profit Potential: Limited Unlimited Loss Potential: Home About Us Terms of Use Disclaimer Privacy Policy Sitemap Copyright The financial products offered by the company carry a high level of risk and can result in the loss of all your funds.
You should never invest money that you cannot afford to lose.