Does Anyone Know C2 Margin Requirement for Options Spreads?

Trading and Markets
1

I know C2 allow options trading, but does anyone know the typical margin requirements for spreads (bull put spreads) and naked put-writing?

I checked with C2 helpdesk - not much info there except this link they gave (which is vague at best): https://support.collective2.com/hc/en-us/articles/205329030-What-are-the-margin-requirements-for-options-

I also tried webtrader to see the margin-required field, which only displays NaN, so no clue there either…

Anyone have any C2 order experience with options writing, and spreads?

Thanks in advance…

2

Unless something has changed over the years, you won’t be able to effectively trade option spreads at C2. The reason is that they treat each leg of the option spread as an individual position, so your buying power is significantly impacted because the short option is treated as uncovered (naked), instead of an option spread with a defined maximum loss.

I tried to trade option spreads many years ago and had discussions with Matthew about this problem, but I don’t believe it has ever been fixed.

Jim

3

Hi, Jim -

That’s not 100% exactly totally correct.

What is true is that trading spreads can be a cumbersome hassle on C2. But to be precise, if you buy the long position first, then the complementary short position should be recognized as a component of a spread and will receive favorable margin requirements. (I.E. the spread will be “recognized” as a spread, and you won’t, for example, be hit with naked short margin requirements on the short leg.)

This is true only for plain vanilla stuff (calendar and vertical spreads). Anything more complex gets more dicey.

So, while it definitely needs a lot of work, I wouldn’t quite agree with Jim’s assessment that it’s impossible to trade option spreads at C2, at least from a margin-use perspective.

The more challenging aspect is not in C2 margin requirements; it is that it is not possible to buy spreads at a debit limit price (or sell them at a specific credit amount), functionality which is now commonly available on most broker platforms. In that sense, Jim is correct that you do need to leg into positions one leg at a time. This is something we need to improve.

4

Hi Matthew,

I’m glad you remembered our prior conversations on this topic!

If you do fix this issue, would you be able to reflect the overall option spread trade as one trade in the stats, such as Win%, Profit Factor, etc.?

As it stands now, assuming you have a profit on the overall option spread trade, C2 now shows it as a 50% win rate, since one leg was profitable and the other leg was probably a loss.

Thanks!
Jim

5

Hi Matthew,
Can you advise the exact margin requirement on a pure naked put-write? No legs, or spreads, or anything complex, eg., Short one-contract TTWO at-the-money put option. It would be good to get a firm idea of margin on this position, before I launch the strategy.
I tried webtrader but the field (margin req) states NaN.
Thanks.

6

The greater of:
20% of the underlying stock value minus the out-of-the-money amount
OR
10% of the underlying value

7

Thanks Matthew. Appreciate the clarity.

8

Have been trading naked options with C2 for a bout a year now. Works as expected, no issues so far. Spreads are not supported as far as i know and have to legged separately. That may present an issue as you cant really sell/buy them at the exact limit price. So need to Buy protective leg first and then sell another. Spreads have defined margin as opposed to Naked, which vary from the Atotrader’s brokers requirement. Nothing to do with C2 here.

Also, If your spread is a winning trade, it will show as 50% win rate, as being mentioned below in the thread.

Overall it is workable solution however needs improvement. I guess a small percentage of C2 traders are trading options. I would ask Mathew here. Good Luck all. Andrew

9

why high jack the thread ?

10

Sorry buddy. Just thought I can Express myself freely and might be providing some useful info. Did I break some forum rules? Then I apologize. Cheers

11

@Andrew_Walker, normally for new topics we create a new thread for them. If someone is promoting their strategy they can create a new thread and keep on adding to it instead of a new thread every update.

Welcome to the forum though!

1 Like
12

Thanks, Will do. I actually started a thread, then C2 AI popped up with suggestions that a similar thread already exists. Didin’t really wanted to hijack anybody’s posts. Good luck trading All.