What is a Covered Put?

Applies only to margin accounts

A covered put is established when a margin account is short (at least) 100 shares and has a short put paired against it.


Margin requirements for a Covered Put

Requirements vary based on the value of the underlying

The margin requirements for a covered put (short stock, short put) are as follows:  


Initial $5.00/share and below: greater of $2.50/share or 100% and no requirement on the short put  


Initial above $5.00/share: greater of $5.00/share or 50% and no requirement on the short put  


Maintenance below $2.50/share and the put option is out of the money: $2.50/share  


Maintenance below $2.50/share and the put option is in the money: $2.50/share + 100% of the in the money amount  


Maintenance $2.50/share to $5.00/share and the put option is out of the money: 100% of the stock  


Maintenance $2.50/share to $5.00/share and the put option is in of the money: 100% of the stock + 100% of the in the money amount of the put  


Maintenance above $5.00/share to $16.67/share and the put option is out of the money: $5.00/share  


Maintenance above $5.00/share to $16.67/share and the put option is in of the money: $5.00/share + 100% of the in the money amount of the put option  


Maintenance above $16.67/share and put is in or out of the money: The maintenance margin requirement is based on a comparison of the stock position's value to the absolute value of all marginable stocks in the account (long and short).