It reduced margin requirements for spread, straddle, wide straddle, butterfly, condor, iron butterfly, and iron condor strategies to improve capital utilization efficiency.

How can you get these reduced margin requirements? And how much can be reduced?

Covered Call Strategy

1. When holding a covered call:

For non-universal securities accounts: No margin is charged for short-call positions.

For universal securities accounts: The reduced margin amount is calculated based on whether the short call is in the money and the margin rate of the underlying stock.

2. When holding the stock and placing a sell call order for the same stock:

For non-universal securities accounts: No margin is charged for open orders.

For universal securities accounts: Short out-of-the-money call to enjoy the reduced margin requirement.

Spread Strategy*

When holding a spread:

1. No margin is charged for short positions in the portfolio with a debit spread. A small margin is charged for short positions in the portfolio with a credit spread. The size of the margin depends on the strike price of the options.

2. No margin is charged for short-call positions with a debit spread.

3. Margin reduction for calendar and diagonal spread strategies is available for universal securities accounts, while non-universal securities accounts only support margin reduction for vertical spread strategies.

Straddle and Strangles Strategy*

1. No reduction for long straddle or strangle strategies.

2. Short straddle or strangle strategies

For non-universal securities accounts: The option with a smaller margin will enjoy the reduced margin requirement.

For universal securities accounts: After excluding the amount equal to its market value, the remaining margin can be reduced for the option with a smaller margin.

Butterfly, Iron Butterfly, Condor, and Iron Condor Strategies

The reduced margin amount is the sum of the reduced margin amounts for the two spread strategies.

*Notes

1. Debit Spread

It contains two strategies.

1) Bull Call Spread: Buy a call option with a lower strike price and sell a call option with a higher strike price.

2) Bear Put Spread: Buy a put option with a higher strike price and sell a put option with a lower strike price.

Applicable scenarios: When there is a directional expectation for the target stock, and there is a certain target price and timing in mind

Profits and risks: Both are limited. The maximum profit is the difference between the strike prices, and the maximum risk is the premium paid.

2. Credit Spread

It contains two strategies.

1) Bear Call Spread: Buy a call option with a higher strike price and sell a call option with a lower strike price.

2) Bull Put Spread: Sell a put option with a higher strike price and buy a put option with a lower strike price.

Applicable scenarios: When there is a directional expectation for the target stock, and there is a certain target price in the opposite direction and timing in mind

Profits and risks: Both are limited. The maximum profit is the premium, and the maximum risk is the difference between the strike prices.