A broker's own margin rules, set stricter than the regulatory minimum, often raised for volatile, concentrated or illiquid positions without warning.
Exchanges and regulators set floors. Brokers set the actual number, and they raise it on concentrated positions, volatile names, earnings events and market-wide stress.
This is a real risk to premium sellers. A requirement that doubles overnight on an unchanged position can create a margin-call out of nothing, and the broker may liquidate before you can act.
Example: you are short 20 XYZ puts at a $630 requirement each, using $12,600 of a $20,000 account. The broker flags XYZ ahead of earnings and raises the house requirement to 40%. Your requirement becomes roughly $25,000, and you are liquidated into a market that has not moved.
Original diagrams for the ideas on this page. Illustrative, not real market data.
Buying a call: payoff at expiry. A 105-strike call bought for 3 loses that whole 3 if the price finishes at or below 105, breaks even at 108, then gains a dollar for every dollar higher. The loss is capped at the premium; the upside is not capped.Margin and leverage. A $5,000 deposit can control a $100,000 position, which is 20:1 leverage. Because the loss is measured on the full $100,000, a 2.5% move against you halves the deposit and brings a margin call, and a 5% move uses all of it.
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