# Naked Put Margin Requirement

## Applies when selling uncovered puts in a margin account

The margin requirement for an uncovered put is the greatest of the following calculations times the number of contracts times the multiplier (usually 100):

• 20% of the underlying price minus the out of money amount plus the option premium
• 10% of the strike price plus the option premium
• \$2.50

The premium received from the sale of the short put may be applied to meet the initial margin requirement.

However, if you are selling a put in a cash account, then the put must be cash-secured. To learn more about selling an outright put in a cash account, please click here.

## Example of selling a naked put in a margin account

Sell to open 1 MAR 45 Put at .50 with the underlying stock at \$47.50:

• [((.2 x 47.50) - 2.5) + 0.50] x 1 x 100 = \$750
• [(.1 x 45) + 0.50] x 1 x 100 = \$500
• \$2.50 x 1 x 100 = \$250

The requirement for this position would be \$750. The \$50 generated from the sale can be applied to the margin requirement, resulting in a buying power requirement of \$700.

Please note that some underlyings may have elevated margin requirements. For example, volatility products or naked options in cash-settled indices.