The margin style for Options can vary depending on the exchange and the product and is not one-size fits all. To be consistent with exchange clearing-houses, TT has implemented two different styles of Options margin which is set at either the product level or exchange level where applicable.

Equity-Style Margin — Also known as “traditional” or “premium-paid-upfront” margin, where the Premium for the Option is debited (from the buyer) or credited (to the seller) at the time of trade. Net Option Value (NOV), which is also known as Net Liquidating Value (NLV), is applied towards the cost; along with Initial Margin (if applicable).

When buying an Equity-Style Option:

1. Options Premium will be deducted from the account.
2. Initial Margin will be deducted from the account.
3. Net Option Value will be credited to the account, up to the amount of the Initial Margin.

When selling an Equity-Style Option:

1. Options Premium will be credited to the account.
2. Initial Margin will be deducted from the account.
3. Net Option Value will be deducted from the account.

Options Premium is calculated by multiplying the following figures together:

1. Price of the Option
2. Quantity of the Order
3. Point Value of the Contract

Example:

1 x CME E-mini S&P 500 Option @ 100.00 has an Options Premium of $5,000
Price (100) x Quantity (1) x Point Value (50) = $5,000

Futures-Style Margin — Options behave in a manner similar to that of a futures contract whereby the trade of the option itself does not result in any Options Premium being debited or credited. Instead, daily realized variation margins are calculated and are paid daily according to the changing value of the option.

When buying or selling a Futures-Style option, the Initial Margin will be deducted from the account