Theres A New Rule Providing Margin Relief For Your Index Options Trading
–News Direct–
By Cboe
Margin relief has become a topic of increasing interest among traders using cash-settled index options. If you arent familiar with this topic, that might sound overwhelming. This article will help clarify what margin relief is, its applications and the recent developments that have broadened its appeal to traders.
What Is Margin Relief And How Is It Used?
Margin relief is an exchange rule that lets traders use less money to maintain their trading positions, which increases their capital efficiency. Essentially, it involves a trader who owns a particular ETF selling a call option with the same underlying index. This is similar to "covered call writing" used in stock trading but is specifically designed for use with ETFs and index options. In simpler t...