Option Strategy Margin
The margin requirements related to option strategy are as follows.
If your newly held options or stocks can constitute an option strategy with your existing positions, the margin requirements for the positions in your option strategy may be reduced, Tiger will make adjustments to the margin reduction or exemption for option portfolios based on market risk levels, liquidity, options expiry date, position conditions and other factors.
If you liquidate part of your position in the option strategy, the option strategy will be invalidated and you will no longer be offered margin relief, which may result in a decrease in the risk value of your account. Please ensure that you have sufficient funds in your account before liquidating your position in the option strategy as forced liquidation may occur when EL<0. Due to the invalidation of the option portfolio, there is a time difference between long and short positions. This may potentially result in losses greater than the theoretical max loss of the option portfolio
If you need to liquidate part of your positions in the option strategy, we recommend that you liquidate the option positions in the option strategy first in order to avoid an increase in margin caused by the liquidation action; if you liquidate the stock positions in the option strategy first but only partially filled, it will cause the option strategy to lapse and there will be both option positions and stock positions in your account, thus the sum of the margin of both positions will be higher than the margin requirement of the option strategy, which will increase the margin of your account.
If you hold an options portfolio that is approaching expiration, due to the risk of exercise of sold options, the probability and amount of additional margin requirements for your options portfolio position will increase as the expiration date approaches, the proportion of the sold options' market value in total assets increases, and the degree of being in-the-money increases. It is recommended that you pay attention to the risks associated with approaching expiration.
Please note that the option strategies cannot currently be applied to some positions whose relevant symbols or contract multipliers have changed due to corporate actions such as split and merger. If a position in the option strategy is subject to such corporate action, this may result in the option strategy invalidating and thus increasing the margin requirement. Please ensure that you have sufficient funds in your account before liquidating your position in the option strategy as a forced liquidation may occur when EL<0.
If you hold the vertical spreads, calendar spreads, and diagonal spreads through expiration: lf the underlying’s price closes above the short strike but below the long strike, your short call will likely be assigned and your long call will expire worthless. Be cautious of this scenario. lf your short call is assigned you'll be left with a short stock position, which carries undefined risk. Meanwhile, your long call will no longer exist to offset the assignment. This may potentially result in losses greater than the theoretical max loss of the call credit spread.
Important: To help mitigate this risk, Tiger may close your position prior to market close on the expiration date; however, this is done on a best-effort basis. Ultimately, you are fully responsible for managing the risk within your account.