How Selling Margin Works

中文

This page only explains how much margin selling an option locks up in the simulator. It gives no directional advice and predicts nothing. Quotes are delayed about 15 minutes, for paper practice only — not real-time quotes, not investment advice.

In one sentence: selling collects money first and takes on the obligation, so a deposit comes first

Buying an option pays money for a right, and the payment settles it. Selling an option collects money and takes on the obligation to the other side: if the market moves against you, the seller owes the difference. The simulator asks the seller to set aside margin first — a deposit against that obligation, locked at open and released at close.

Buying locks no margin

Buying to open locks no margin; you only need enough cash for the premium plus fees. The premium is the fill price times 100 times contracts, fees are $0.65 per contract per side, and all P&L is shown net of fees.

Single-leg short: strike times 20%, times 100, times contracts

Margin locked on a single-leg short equals the strike times 20%, times 100, times contracts. An arithmetic example only, not a real quote: strike 7700, selling 1 contract locks 7700 times 20% times 100, which is $154,000. The premium you collect lands in cash at open, but the page still checks that cash after the sale covers all margin already locked plus this new lock — otherwise the order cannot open.

Why 10,000 dollars can barely open a single-leg short

The simulator starts with $10,000 of virtual cash, while SPX strikes run in the thousands, so a single-leg short of 1 contract locks well over a hundred thousand dollars — far above $10,000. That makes single-leg shorts barely openable at this account size. It is not a page bug; the formula produces that result. To practice selling logic, see the spread section below.

Spreads: less margin, but a different formula

A credit vertical spread locks the strike difference between its two legs minus the net credit, times 100 times contracts. An iron condor locks the larger side's spread minus the net credit, times 100 times contracts. A debit spread locks no extra margin. Spread fees run $2.50 per leg per contract on each open or close ($5 to open one vertical spread, $10 to open one iron condor, the same again to close), and one spread open counts as 1 open for the day.

Released on close, and this is a simplified simulator convention

Locked margin is released when the position closes. Note that the 20% rate and the spread formulas are simplified simulator conventions, not a broker's real margin requirement — a real broker's calculation is more complex. The discipline rules still apply at the same time: at most 3 opens per Eastern day, and the daily fee circuit breaker at $60.