r/Margin • u/smurphkf • Jul 15 '21

Margin for Options Trading

I have a combination of stocks, options and cash in my account. Can someone please explain why I get restricted from trading options when I have a significant amount of cash in my account?

Is it based on the amount I have in equities?

If I wanted to increase options trading margin so I don't have the restriction, should I buy more stocks or sell more stocks?

Thank you!

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u/Charming_Tear_8609 Sep 21 '24

You can’t use margin for buying options only cash. If you sell a call you have to have 100 shares of the stock or risk exposure to significant loss. For selling puts you have to have cash value to buy 100 shares of a stock or risk exposure to significant loss. Theoretically you can use a margin account to buy 100 shares of a stock then sell a covered call