Option Strategy

Option Strategy refers to a combination of positions in an account with a hedging relationship, typically a combination of options and underlying stocks. Tiger will apply some margin relief to the ption Strategy in consideration of the fact that the option strategy mitigates the relevant risks.

 

Option Strategy Applicable Scope

Client: The option strategy is only available to clients who meet the corresponding conditions and have opened the option strategy permissions. Please contact customer service for more details.

Symbol: US options and US stocks

 

Option Strategy Type

Tiger currently offers nine option strategies as follows:

1. Covered Call: A combination of 1 lot short position in a call option and 100 shares long position in the same underlying U.S. stock.

2. Covered Put: A combination of 1 lot short position in a put option and 100 shares short position in the same underlying U.S. stock.

3. Call Vertical Spread: A combination of 1 lot short position in a call option and 1 lot long position in a call option. This option strategy can be combined when the call options aforementioned have the same underlying (U.S. stock or index), the same expiration date, and different strike prices.
 
4. Put Vertical Spread: A combination of 1 lot short position in a put option and 1 lot long position in a put option. This option strategy can be combined when the put options aforementioned have the same underlying (U.S. stock or index), the same expiration date, and different strike prices.

5. Short Call and Put: A combination of 1 lot short position in a call option and 1 lot short position in a put option. This option strategy can be combined when both options aforementioned have the same underlying (U.S. stock or index) and the same expiration date. The strike price of put option is equal to or less than the strike price of call option.

6. Protective Call: A combination of 1 lot long position in a call option and 100 shares short position in the same underlying U.S. stock.

7. Protective Put: A combination of 1 lot long position in a put option and 100 shares long position in the same underlying U.S. stock.

8. Call Calendar Spread: A combination of 1 lot long position in a call option and 1 lot short position in a call option. This option strategy can be combined when the call options aforementioned have the same underlying (U.S. stock or index), the strike price can be different. The expiration date of short position is earlier than the expiration date of long position.

9. Put Calendar Spread: A combination of 1 lot long position in a put option and 1 lot short position in a put option. This option strategy can be combined when the put options aforementioned have the same underlying (U.S. stock or index), the strike price can be different. The expiration date of short position is earlier than the expiration date of long position.

 

Option Strategy Margin

The margin requirements related to option strategy are as follows.

1. If your newly held options or stocks can constitute an option strategy with your existing positions, the margin requirements for the positions in your option strategy may be reduced.

2. If you liquidate part of your position in the option strategy, the option strategy will be invalidated and you will no longer be offered margin relief, which may result in a decrease in the risk value of your account. Please ensure that you have sufficient funds in your account before liquidating your position in the option strategy as a forced liquidation may occur when EL<0.

If you need to liquidate part of your positions in the option strategy, we recommend that you liquidate the option positions in the option strategy first in order to avoid an increase in margin caused by the liquidation action; if you liquidate the stock positions in the option strategy first but only partially filled, it will cause the option strategy to lapse and there will be both option positions and stock positions in your account, thus the sum of the margin of both positions will be higher than the margin requirement of the option strategy, which will increase the margin of your account. 

Please note that the option strategies cannot currently be applied to some positions whose relevant symbols or contract multipliers have changed due to corporate actions at present. If a position in the option strategy is subject to such corporate action, this may result in the option strategy invalidating and thus increasing the margin requirement. Please ensure that you have sufficient funds in your account before liquidating your position in the option strategy as a forced liquidation may occur when EL<0.

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