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The Complete Guide to Option Selling: How Selling Options Can Lead to Stellar Returns in Bull and Bear Markets, 3rd Edition by Michael Gross, James Cordier

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6

SPAN Margin

Your Key to High Returns

I still remember the first time I sold a stock option. I was collecting a $150 put premium on a $60 stock. The thing looked like a lock. I couldn’t believe more people weren’t selling these things. What was I missing? Then I found out. The margin requirement was over $5,000 to hold the thing. Let’s see, put up $5,000 to make $150 in 60 days: 3% in 2 months. Maybe that’s not bad to most people. But to a person used to selling futures options, it’s “not what we’re looking for,” to say the least. I’m used to putting up $5,000 to make $3,500 in 60 days. That’s what a futures option seller calls return. And it’s what you can target, too, if you are using SPAN margin.

Selling options, especially futures options, ...

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