Option Margin Calculator

How to Use the Option Margin Calculator

The Option Margin Calculator helps you estimate the margin required for option trading. Follow these steps to use the calculator:

1. Enter the current price of the underlying stock in the "Stock Price" field.
2. Enter the premium paid for the option in the "Option Price" field.
3. Enter the strike price of the option in the "Strike Price" field.
4. Enter the number of option contracts being traded in the "Number of Contracts" field.
5. Click the "Calculate" button to get the margin required.

Understanding the Calculation

The margin required for option trading is calculated using the following formula:

Margin = max(0.20 * stockPrice - optionPrice, 0.07 * strikePrice) * contracts

This formula ensures that the margin is set at a level that covers potential losses based on the stock price, option price, and strike price.