1. What is a Margin Calculator for Options?

Definition: This calculator estimates the margin requirement for options trading based on premium, SPAN margin, and exposure.

Purpose: It helps traders and investors determine the total margin needed for their options positions.

2. How Does the Calculator Work?

The calculator uses the formula:

Where:

• \( M \) — Total margin requirement (currency)
• \( P \) — Option premium (currency)
• \( S \) — SPAN margin requirement (currency)
• \( E \) — Exposure margin (currency)

Explanation: The total margin is the sum of the option premium paid/received, the SPAN margin (standardized portfolio analysis of risk), and any additional exposure margin required.

3. Importance of Margin Calculation

Details: Proper margin calculation ensures traders maintain sufficient funds in their accounts to cover potential losses and meet exchange requirements.

4. Using the Calculator

Tips: Enter the option premium, SPAN margin, and exposure margin values in your currency. All values must be ≥ 0.

5. Frequently Asked Questions (FAQ)

Q1: What is SPAN margin?
A: SPAN (Standard Portfolio Analysis of Risk) is a margin system that calculates worst-case loss scenarios for derivatives portfolios.

Q2: What's included in exposure margin?
A: Exposure margin covers extreme market movements beyond SPAN calculations and varies by broker/exchange.

Q3: Do I pay margin on both long and short options?
A: Typically, margin is required for short options positions, while long options require payment of the premium only.

Q4: How do I find my SPAN margin requirement?
A: Your broker provides SPAN margin figures, or you can use exchange-provided SPAN calculators.

Q5: Does this include other position margins?
A: This calculates margin for a single options position. Portfolio margins may differ due to offsetting positions.