Buying Options On — Margin

The term "margin" in options trading refers to two distinct scenarios: Requirement Purpose Buying (Long) Usually 100% of premium (except LEAPS). Payment for the contract. Selling (Short) Varies (Initial + Maintenance).

Collateral to ensure you can fulfill the obligation if assigned. buying options on margin

Trading options on margin allows you to leverage your existing capital to control larger positions, but it operates under much stricter rules than traditional stock margin. While you can borrow money to buy certain long-term options, most standard option purchases must be paid for in full. The term "margin" in options trading refers to

Using margin to trade options introduces layers of risk beyond standard cash trading: Collateral to ensure you can fulfill the obligation

In a traditional stock trade, Regulation T typically allows you to borrow up to 50% of the purchase price. Options differ significantly: