Europe to Europe Options Margin Requirements

Europe Options Margin Overview

Europe Options Margin Requirements


As a resident of Europe trading options in Europe you are subjected to Rules-based margin and Risk-based margin. The complete margin requirement details are listed in the sections below.




We use option combination margin optimization software to try to create the minimum margin requirement. However, due to the system requirements required to determine the optimal solution, we cannot always guarantee the optimal combination in all cases. Please note that we do not support option exercises, assignments or deliveries which may result in an account being non-compliant with margin requirements. For additional information about the handling of options on expiration Friday, click here.

Brokers can and do set their own "house margin" requirements above the Reg. T or statutory minimum. For option spreads in VIX securities, we may charge an additional minimum house margin requirement of $150. For option positions that meet the definition of a "universal" spread under CBOE Rule 12.3(a)(5), we may charge an additional house requirement of 102% of the net maximum market loss associated with the spread (i.e., net long option position price – net short option position price * 102%), if greater than the statutory requirement.


Option Strategies

The following tables show option margin requirements for each type of margin combination.

Note:

These formulas make use of the functions Maximum (x, y, ..), Minimum (x, y, ..) and If (x, y, z). The Maximum function returns the greatest value of all parameters separated by commas within the paranthesis. As an example, Maximum (500, 2000, 1500) would return the value 2000. The Minimum function returns the least value of all parameters separated by commas within the paranthesis. As an example, Minimum (500, 2000, 1500) would return the value of 500. The If function checks a condition and if true uses formula y and if false formula z. As an example If (20 < 0, 30, 60) would return the value 60.




Long Call or Put

Long Call Long Put
Margin
Initial/RegT End of Day Margin None
Maintenance Margin Same as Initial
Cash or IRA Cash Same as Initial
IRA Margin Same as Margin Account



Short Naked Call

Margin
Initial/RegT End of Day Margin Stock Options 1
Call Price + Maximum ((20% 2 * Underlying Price - Out of the Money Amount),
(10% * Underlying Price))

Index Options 1
Call Price + Maximum ((15% 3 * Underlying Price - Out of the Money Amount),
(10% * Underlying Price))

World Currency Options 1
Call Price + Maximum ((4% 2 * Underlying Price - Out of the Money Amount),
(0.75% * Underlying Price))

Cash Basket Option 1
In the Money Amount
Maintenance Margin Same as Initial
Cash or IRA Cash N/A
IRA Margin Same as Cash Account



Short Naked Put

Short Naked Put
Margin
Initial/RegT End of Day Margin Stock Options 1
Put Price + Maximum ((20% 2 * Underlying Price - Out of the Money Amount),
(10% * Strike Price))

Index Options 1
Put Price + Maximum ((15% 3 * Underlying Price - Out of the Money Amount),
(10% * Strike Price))

World Currency Options 1
Put Price + Maximum ((4% 2 * Underlying Price - Out of the Money Amount),
(0.75% * Underlying Price))

Cash Basket Option 1
In the Money Amount
Maintenance Margin Same as Initial
Cash or IRA Cash Put Strike Price
IRA Margin Same as Cash Account



Covered Calls

Short an option with an equity position held to cover full exercise upon assignment of the option contract.

Covered Calls
Margin
Initial/RegT End of Day Margin Initial Stock Margin Requirement + MAX((In the Money Amount),(MIN(price of the option),(price of the stock))) 4
Maintenance Margin Initial Stock Margin Requirement + MAX((In the Money Amount),(MIN(price of the option),(price of the stock))) 4
Cash or IRA Cash Stock paid in full or None
IRA Margin Stock paid in full or None



Covered Puts

Short an option with an equity position held to cover full exercise upon assignment of the option contract.

Covered Puts
Margin
Initial/RegT End of Day Margin Initial Stock Margin Requirement + In the Money Amount
Maintenance Margin Initial Stock Margin Requirement + In the Money Amount
Cash or IRA Cash N/A
IRA Margin N/A



Call Spread

A long and short position of equal number of calls on the same underlying (and same multiplier) if the long position expires on or after the short position.

Call Spread
Margin
Initial/RegT End of Day Margin Maximum (Strike Long Call - Strike Short Call, 0)
Maintenance Margin Same as Initial
Cash or IRA Cash Same as Initial if both options are European-style cash-settled

Otherwise, N/A.
IRA Margin Same as Margin Account



Put Spread

A long and short position of equal number of puts on the same underlying (and same multiplier) if the long position expires on or after the short position.

Put Spread
Margin
Initial/RegT End of Day Margin Maximum (Short Put Strike - Long Put Strike, 0)
Maintenance Margin Same as Initial
Cash or IRA Cash Same as Margin Account (Both options must be European style cash settled)

Short Put Strike Price (American style options)
IRA Margin Same as Margin Account



Collar

Long put and long underlying with short call. Put and call must have same expiration date, same underlying (and same multiplier), and put exercise price must be lower than call exercise price.

Collar
Margin
Initial/RegT End of Day Margin Initial Stock Margin Requirement + In the Money Call Amount

Equity with Loan Value of Long Stock
Minimum (Current Market Value, Call Aggregate Exercise Price)
Maintenance Margin Minimum (((10% * Put Exercise Price) + Out of the-Money Put Amount),
(25% * Call Exercise Price))
Cash or IRA Cash

None

IRA Margin

None




Long Call and Put

Buy a call and a put.

Long Call and Put Long Call and Put
Margin
Initial/RegT End of Day Margin Margined as two long options.
Maintenance Margin Same as Initial
Cash or IRA Cash Same as Margin Account
IRA Margin Same as Margin Account



Short Call and Put

Sell a call and a put.

Short Call and Put Short Call and Put
Margin
Initial/RegT End of Day Margin If Initial Margin Short Put > Initial Short Call,
then Initial Margin Short Put + Price Short Call

else

If Initial Margin Short Call >= Initial Short Put,
then Initial Margin Short Call + Price Short Put
Maintenance Margin Same as Initial
Cash or IRA Cash N/A
IRA Margin N/A



Long Butterfly

Two short options of the same series (class, multiplier, strike price, expiration) offset by one long option of the same type (put or call) with a higher strike price and one long option of the same type with a lower strike price. All component options must have the same expiration, same underlying, and intervals between exercise prices must be equal.

Long Butterfly
Margin
Initial/RegT End of Day Margin None
Maintenance Margin Same as Initial
Cash or IRA Cash None

Both options must be European-style cash-settled.
IRA Margin Same as Margin Account



Short Butterfly Put

Two long put options of the same series offset by one short put option with a higher strike price and one short put option with a lower strike price. All component options must have the same expiration, same underlying, and intervals between exercise prices must be equal.

Short Butterfly Put
Margin
Initial/RegT End of Day Margin MAX(Highest Put Strike - Middle Put Strike, 0) +
MAX(Lowest Put Strike - Middle Put Strike, 0)
Maintenance Margin Same as Initial
Cash or IRA Cash N/A
IRA Margin N/A



Short Butterfly Call

Two long call options of the same series offset by one short call option with a higher strike price and one short call option with a lower strike price. All component options must have the same expiration, same underlying, and intervals between exercise prices must be equal.

Short Butterfly Call
Margin
Initial/RegT End of Day Margin MAX(Middle Call Options Strike - High Call Options Strike, 0) +
MAX(Middle Call Options Strike - Lowest Call Option Strike, 0)
Maintenance Margin Must maintain initial margin.
Cash or IRA Cash N/A
IRA Margin N/A



Long Box Spread

Long call and short put with the same exercise price ("buy side") coupled with a long put and short call with the same exercise price ("sell side"). Buy side exercise price is lower than the sell side exercise price. All component options must have the same expiration, and underlying (multiplier).

Long Box Spread
Margin
Initial/RegT End of Day Margin None
Maintenance Margin Same as Initial
Cash or IRA Cash N/A
IRA Margin Same as Margin Account



Short Box Spread

Long call and short put with the same exercise price ("buy side") coupled with a long put and short call with the same exercise price ("sell side"). Buy side exercise price is higher than the sell side exercise price. All component options must have the same expiration, and underlying (multiplier).

Short Box Spread
Margin
Initial/RegT End of Day Margin MAX(1.02 x cost to close, Long Call Strike – Short Call Strike)
Maintenance Margin Same as Initial
Cash or IRA Cash N/A
IRA Margin Same as Margin Account



Conversion

Long put and long underlying with short call. Put and call must have the same expiration date, underlying (multiplier), and exercise price.

Conversion
Margin
Initial/RegT End of Day Margin Initial Stock Margin Requirement + In the Money Call Amount
Maintenance Margin 10% of the strike price + In the Money Call Amount
Cash or IRA Cash N/A
IRA Margin N/A



Reverse Conversion

Long call and short underlying with short put. Put and call must have same expiration date, underlying (multiplier), and exercise price.

Reverse Conversion
Margin
Initial/RegT End of Day Margin In the Money Put Amount + Initial Stock Margin Requirement
Maintenance Margin In the Money Put Amount + (10% * Strike Price)
Cash or IRA Cash N/A
IRA Margin N/A



Protective Put

Long Put and Long Underlying.

Protective Put
Margin
Initial/RegT End of Day Margin Initial Stock Margin Requirement
Maintenance Margin Minimum (((10% * Put Strike Price) + Put Out of the Money Amount),
Long Stock Maintenance Requirement)
Cash or IRA Cash None
IRA Margin None



Protective Call

Long Call and Short Underlying.

Protective Call
Margin
Initial/RegT End of Day Margin Initial Standard Stock Margin Requirement
Maintenance Margin Minimum (((10% * Call Strike Price) + Call Out of the Money Amount),
Short Stock Maintenance Requirement)
Cash or IRA Cash N/A
IRA Margin N/A



Iron Condor

Sell a put, buy put, sell a call, buy a call.

Iron Condor
Margin
Initial/RegT End of Day Margin Short Put Strike - Long Put Strike
Maintenance Margin Same as Initial
Cash or IRA Cash If all options are European and cash-settled, same as margin account.
IRA Margin Same as Margin Account




Risk Margin Overview


What is risk based margining?

A risk based margin system evaluates your portfolio to set your margin requirements. The risk valuations of your positions are created using simulated market movements that anticipate possible outcomes. As a result, a more accurate margin model is created, allowing the investor to increase their leverage.


How are correlated risks offset?

Within a group of positions with the same underlying, 100% of the gain at any one valuation point is allowed to offset another positions loss at the same valuation point.

Example: An account holds a long stock position in stock ABC and a long put option contract in ABC. If a theoretical worst case scenario causes the underlying asset to drop 15%, then the loss that on the long stock position would be offset by the gain on the long put position.


What are my eligibility requirements?

Eligibility requirements vary according to the investor’s personal information, region, and exchange.


What positions are eligible?

All positions in margin equity securities (including foreign equity securities and options on foreign equity securities, listed options on an equity security or index of equity securities, security futures products, unlisted derivatives on an equity security or index of equity securities, warrants on an equity security or index of equity securities, broad-based index futures, and options on broad-based index futures.




Additional Europe Margin Requirements for Residents of Europe


Use the following links to view any of our other Europe margin requirements:

Stocks

Futures & FOPs

SSF - Single Stock Futures

Fixed Income

Mutual Funds

CFDs

Forex

Metals


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Further Reading


To learn more about trading on margin, go to our Education Center:

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Disclosures
  • Due to regulatory restrictions, Interactive Brokers does not currently offer margin lending to natural persons who are residents of Australia.
  • IBKR house margin requirements may be greater than rule-based margin.