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American Capital Agency Corp. Message Board

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  • yourbestfriendintheworld yourbestfriendintheworld Dec 4, 2012 11:20 AM Flag

    The real options trade for AGNC

     

    "I will only allow myself to be assigned as many contracts as I can pay for."

    Good for you, because your broker is only holding 10% of the exercise price out of your margin. They'll let you get really wound-up on them, but "only" to 10:1 oversubscription of your ability to pay.

    (NB: in this case the cash from the sold Puts is part of your margin but you spent cash on the bought Puts and their market value is not part of your margin...so the whole deal raised your margin by 30 cents and decreased it by $3. maintenance. on open you needed $6. you can only get to 5:1 on open all at once, but if you open in smaller trades you can approach 10:1. silly system, really.)

    You want to go less than 1:1 against margin on anything that puts cash on you (long calls, short puts) also to avoid getting into trouble with "unsettled funds" for days after an exercise happens.

    Brokers really should give you real-time indications of your margin and unsettled-funds situations, but they stopped doing useful work on their online presence a decade ago.

    This topic is deleted.
 
AGNC
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