Portfolio margin
Definition · Level 4 · Naked options
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Risk-based requirement that stress-tests the whole account across a range of price moves (about ±15% for single stocks) and charges the worst loss; often lower for hedged books, needs large minimum equity, can jump in a vol spike.
Example
A hedged book might need a fraction of its Reg T requirement.
Rules and market figures change: check the current ones before relying on this.
Where Tradecraft teaches it
Level 4 · Naked options, in the lesson “Naked margin: how brokers size it”: The typical strategy-based formula, why requirements expand against you, and portfolio margin.
Related terms
- House requirementA broker’s own margin rule, stricter than the regulatory minimum; it can be raised with little or no notice on volatile names, concentrated…
- Margin-requirement expansionThe rise in collateral required on a short option as it moves against you: the premium grows and the OTM discount shrinks (and, for a call, 20% of a…
- Strategy-based marginRule-based requirement set per position type by formula — e.g. for a short equity option the typical minimum is premium + 20% of the underlying −…
- Blow-upLosing all or most of an account in a single event, usually from oversized short-vol or leveraged positions.
- Calendar Spread – CreditBuy the near-term option and sell the longer-term one at the same strike.
- Delta hedgingTrading the underlying (or futures) to offset a position’s delta so small moves barely change P&L, leaving gamma, theta and vega; it must be redone…