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Tuesday, April 03, 2007

New Portfolio Margin Rules

For those who are not aware, just to bring your attention to new portfolio margin rules by SEC wef 2 Apr 07. In short, the new portfolio margining rules align the amount of margin money required to TOTAL PORTFOLIO RISK and expands the scope of products eligible for portfolio margining to include equities, equity options, narrow-based index options, certain security futures products (such as single stock futures), and unlisted derivative. So we are no longer looking at standalone strategies and can 'enjoy' the netting off effects on margin requirement on a portfolio basis. See press release by CBOE.

In plain simple English, these are the resulting benefits:
-Lower margin requirements => lower cost of trading => increase in trading volume => more liquidity and better bid/ask spreads

Phil's stock world has a great write-up on this: Portfolio Margin - The Dawn of a New Era, go take a look.


3 Comments:

Blogger Andy Cole said...

Hi,

Do you know of any sites that provide option charts with overlays and technical analysis indicators?

Thanks!

Andy

socaloptionstrader.blogspot.com/

12:31 AM  
Blogger Simply Options Trader said...

Hi Andy,
You can key in the option symbol in Prophet (e.g. for .QAADR for AAPL Apr 90 Call) and apply the technical studies.

However, if by technical analysis you are referring to probability and risk analysis of the option position, then Thinkorswim has got good tools.

9:54 AM  
Blogger Andy Cole said...

Awesome, thanks!

Andy

5:50 AM  

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