What are the different maintenance requirements for different securities?
Each position open will have different maintenance requirements. While the charts below discuss typical maintenance requirements, each security may have higher maintenance requirements. For example, XYZ stock that is considered blue-chip, but has higher volatility, may have maintenance requirements set at 40%-50%.
What are the maintenance requirements for stocks?
The below chart shows the margin requirements for margin-approved stock positions.
Type of Security | Initial Requirements | Maintenance Requirement | Day Trade Requirement |
Priced above $5 | 50% x M.V. | 25% x M.V. | 25% x M.V. |
Priced b/w $3 and $4.99 | 50% x M.V. | 50% x M.V. | 25% x M.V. |
Priced below $2.99 | 100% x M.V. | 100% x M.V. | 25% x M.V. |
2x Leveraged Exchange Traded Funds (ETF’s) | 50% x M.V. | 50% x M.V. | 50% x M.V. |
3x Leveraged Exchange Traded Funds (ETF’s) | 75% x M.V. | 75% x M.V. | 75% x M.V. |
* M.V. (Margin Value) is the amount obtained by dividing the market value of securities by the applicable margin percentage.
What are the maintenance requirements for Bonds?
The below chart shows the margin requirements for investment grade, margin-approved bonds:
Type of Security | Initial Long | Initial Short | Maintenance Long | Maintenance Short |
Unit Investment Trust | 100% | 100% | 100% | 100% |
Corporate Bond | 20% | 30% | 20% | 30% |
Municipal Note | 15% | 15% | 15% | 15% |
Municipal Bond | 25% | 25% | 25% | 25% |
Government Bond | 10% | 10% | 10% | 10% |
Collateralized Debt Obligations | 100% | 100% | 100% | 100% |
Treasury Bond | 6% | 6% | 6% | 6% |
Treasury Note | 6% | 6% | 6% | 6% |
Treasury Bill | 6% | 6% | 6% | 6% |
Convertible Corp Bond | 30% | 30% | 30% | 30% |
What are the maintenance requirements for options strategies?
Below are the maintenance requirements for the different types of options strategies:
Equity Options:
Type | Cash Initial Requirement | Margin Initial Requirement | Margin Maintenance Requirement |
Long Call or Put | Premium | No Requirement |
|
Short Call or Put* | Not Allowed | The greater of the following:
1. 25% of the underlying current market value minus the OTM amount times the multiplier
2. Calls – 15% of the underlying current market value plus the premium; Puts – 15% of the exercisable value plus the premium 3. Calls – 250 per contract; Puts – 250 per contract not to exceed the max loss | Same as margin initial requirement; if the first calculation is used then the cost of the option must be added to the requirement |
Straddles or Strangles | Not Allowed | The short call or put requirement (whichever is greater) plus the cost to close the option on the other side | Same as Margin Initial Requirement
|
* Does not include cash-secured Puts
Spread Requirements:
Type | Cash Initial Requirement | Margin Initial Requirement | Margin Maintenance Requirement |
Universal Spread | Not Allowed | Max Defined Loss of the Overall Position plus/minus the premium received | Max Defined Loss of the Overall Position |
Covered Strategy Requirements:
Type | Cash Initial Requirement | Margin Initial Requirement | Margin Maintenance Requirement |
Covered Put | Not Allowed | The Initial Requirement of the Short Position minus the Premium Received | The Requirement of the Underlying Position* |
Covered Call/Buy-Write | Cost of the Underlying Position minus the Premium Received | The Initial Requirement of the Long Position Minus the Premium Received | Out-of-the-Money: The requirement of the underlying position In-the-Money: The requirement of the underlying position valued at the strike price of the call plus the in-the-money amount of the option* |
* If the underlying position has a higher maintenance requirement, the higher requirement would apply; concentration requirements do not apply
Hedged Strategies Requirements:
Type | Cash Initial Requirement | Margin Initial Requirement | Margin Maintenance Requirement |
Married Put | Cost of Each Position | The Initial Requirement of the Long Position plus the Cost of Each Option | The lower of 10% of the Put exercise price plus 100% of the out-of-the-money amount or 20% of the underlying market value |
Married Call | Not Allowed | The Initial Requirement of the Short Position plus the Cost of the Option | 100% of the underlying market value plus the lower of 10% of the call exercise price plus 100% of any out-of-the-money amount For stock, the greater of $2.50/share or 100% of the stock market value For stock with market value of $5 or more per share, the greater of $5/share or 30% of the stock market value |
Conversion | Cost of the Underlying and the Put minus the Premium Received for the Call | The Initial Requirement of the Long Position and the Long Put minus the Premium of the Short Call | The Requirement of the Long Position plus Premium of the Short Call |
Reverse Conversion | Not Allowed | The Initial Requirement of the Short Position the Long Call minus the Premium of the Short Put | The Requirement of the Short Position plus the Premium of the Short Put |
Collar | Cost of the Underlying and the Put minus the Premium Received for the Call | The Initial Requirement of the Underlying Position and the Long Option minus the Premium of the Short Option | The Requirement of the Underlying Position plus Premium of the Short Option |
Index Options Requirements:
Type | Cash Initial Requirement | Margin Initial Requirement | Margin Maintenance Requirement |
Long Call or Put | Premium | No Requirement |
|
Short Call or Put* | Not Allowed | The greater of the following: 1. 25% of the underlying current market value minus the OTM amount times the multiplier 2. Calls – 15% of the underlying current market value plus the premium; Puts – 15% of the exercisable value plus the premium 3. Calls – 250 per contract; Puts – 250 per contract not to exceed the max loss | Same as Margin initial requirement (if the first calculation is used, the cost of the option must be added to the requirement) |
Short Straddles of Strangles | Not Allowed | The short call or put requirement, whichever is greater, plus the cost to close the option on the other side | Margin initial requirement plus the cost to close both options |
*does not include cash-secured puts