Option Margin Calculator
Selling an option obligates you in a way buying never does, so brokers demand collateral up front: margin. This page estimates that collateral two ways. The Simple estimate tab keeps the original estimator: premium per share, shares per contract, a margin coefficient and a flat per-contract charge. The Writer margin tab applies the standard OCC-style retail formula for naked calls and puts, and shows the buyer cost beside it, since buyers post no margin at all.
Simple margin estimate
Heuristic only: premium component = premium per share × shares per contract × margin coefficient, plus the flat per-contract charge, times the number of contracts. Brokers using the OCC-style schedule should use the Writer margin tab instead.
Retail approximation of the OCC initial margin for uncovered options. Brokers may require more, and requirements change with volatility.
OCC-style writer margin
Estimate only. Your broker’s house requirements, portfolio margin treatment and intraday recalculation can all move the real figure. Confirm on your trading platform before placing the trade.
Quick Answer
Writing one naked call on a $50 stock at a $45 strike with a $2 premium needs about $1,200 of margin per contract under the OCC-style retail formula: $2 plus the larger of (20% of $50 minus the out-of-the-money amount) and (10% of $50), times 100 shares. The buyer of that same contract pays only the $200 premium and posts no margin. The calculator above is pre-filled with this exact call.
Key takeaways
- Only writers post margin. Buyers pay the premium up front and can never lose more than that premium, so the margin rule does not apply to them.
- The OCC-style formula is premium plus the larger of (20% of the underlying minus any out-of-the-money amount) and a 10% floor: 10% of the stock price for calls, 10% of the strike for puts.
- The out-of-the-money deduction is floored at zero. An in-the-money option contributes nothing to the deduction; it never adds to the margin the way a negative figure would.
- Brokers add their own house buffers on top, recalculate as prices move, and SPAN margin (futures, Indian F&O) is a different model entirely.
- Quick Answer
- How to use the two margin modes
- The OCC-style writer margin formula
- The simple estimate formula
- Worked example: $126.25 simple estimate and a $1,200 writer margin
- Margin by strategy: where naked writing sits
- Writer versus buyer: two sides of one contract
- What competing calculators miss
- Frequently asked questions
- Add This Calculator to Your Website
- References
How to use the two margin modes
Pick the tab that matches how your broker quotes margin, fill in the pre-set example values (or your own), and click Calculate. Results stay hidden until you click.
- Simple estimate: enter the premium per share, shares per contract, the margin coefficient, the flat per-contract charge and the number of contracts. The tool computes the premium component (2.50 × 100 × 0.50 = $125.00 in the pre-filled run), adds the $1.25 charge once per contract, and scales by contracts: at the pre-filled 1 contract the estimated margin is $126.25, and at 10 contracts it is $1,262.50.
- Writer margin: choose call or put, then enter the underlying price, strike, premium per share, number of contracts and the contract multiplier. The tool applies the OCC-style retail formula and reports margin per share, per contract and for the whole position.
- Read the buyer line: the writer tab also shows what the same contract would cost to buy. That contrast, $1,200 of writer margin against a $200 buyer cost in the example, is the point of the margin rule: the writer's risk is far larger than the premium received.
- Reset restores the examples: either Reset button returns its tab to the worked-example values shown here.
A note on the simple estimator's charge: it is added once per contract, exactly as the "per contract charge" label says, and then multiplied by the contract count, so the position margin scales linearly with contracts just as the writer tab does. An earlier version of this article multiplied the charge by the share count; that was wrong against the tool, and the worked example below now matches the calculator to the cent. If your broker's schedule looks nothing like the OCC pattern, the simple tab is the one to use; if it does, use the writer tab.
The OCC-style writer margin formula
For a naked call, the per-share requirement is the premium plus the greater of two legs: 20% of the underlying price minus the out-of-the-money amount, or 10% of the underlying price. For a naked put, the first leg is the same but the floor uses 10% of the strike price instead.
Naked put, per share = Premium + max(20% × Underlying − OTM amount, 10% × Strike)
OTM amount = max(Strike − Underlying, 0) for calls; max(Underlying − Strike, 0) for puts
Position margin = per-share margin × contract multiplier × number of contracts
This is the strategy-based margin published by Cboe and used, with broker-specific additions, across US retail brokers: the Cboe strategy-based margin table states the short call requirement as the option proceeds plus 20% of the underlying less any out-of-the-money amount, floored at the proceeds plus 10% of the underlying, and Interactive Brokers publishes the same structure in its options margin requirements. The legal framing sits in FINRA Rule 4210, summarised with the exact formulas in this options writing obligations guide. Two details matter: the OTM deduction is floored at zero (an in-the-money option simply gets no deduction), and the premium is always added on top, never subtracted.
The simple estimate formula
The simple tab is a broker-schedule heuristic, not an exchange rule: premium per share times shares per contract times the margin coefficient, plus the flat per-contract charge added once per contract, then scaled by the contract count.
With the pre-filled values: ((2.50 × 100 × 0.50) + 1.25) × 1 = $126.25. The charge is not multiplied by the share count; the label says per contract and the tool treats it that way, multiplying the per-contract figure by contracts instead. Use this tab when your broker publishes a coefficient-style schedule that does not follow the OCC pattern. When it does follow the OCC pattern, the writer tab's formula above is the honest one.
Worked example: $126.25 simple estimate and a $1,200 writer margin
Every number below is a verified run of the calculator above. The simple tab is pre-filled with the $2.50 / 100 / 0.50 / $1.25 run; the writer tab with the $50 stock, $45 strike, $2 premium call.
| Run | Per share | Per contract | Position |
|---|---|---|---|
| Simple estimate: 2.50 × 100 × 0.50 + $1.25 | – | $126.25 | $126.25 |
| Write call: stock $50, strike $45, $2 premium, 1 contract | $12.00 | $1,200.00 | $1,200.00 |
| Write put: stock $50, strike $55, $3 premium, 1 contract | $13.00 | $1,300.00 | $1,300.00 |
| Deep OTM call: stock $100, strike $120, $1.50 premium, 5 contracts | $11.50 | $1,150.00 | $5,750.00 |
Inside the worked call: OTM = max(45 − 50, 0) = 0, so leg one is 0.20 × 50 − 0 = $10.00 and the floor leg is 0.10 × 50 = $5.00. Per-share margin = 2 + max(10, 5) = $12.00; per contract = $1,200.00. The buyer of that contract pays 2 × 100 = $200.00 and posts nothing. The deep out-of-the-money call shows the OTM deduction working: OTM = max(120 − 100, 0) = 20, leg one = 20 − 20 = 0, the floor leg is 0.10 × 100 = 10, so per-share = 1.50 + 10 = $11.50. What makes up that $12 per share:
Margin by strategy: where naked writing sits
Naked writing carries the heaviest margin because the risk is open-ended. Defined-risk structures need far less.
| Strategy | What the broker requires | Burden |
|---|---|---|
| Naked call write | Premium + max(20% × stock − OTM, 10% × stock), per share | Highest |
| Naked put write | Premium + max(20% × stock − OTM, 10% × strike), per share | Highest |
| Covered call | No margin on the short call itself; the owned stock collateralises it | No margin |
| Cash-secured put | Cash equal to the full exercise value (strike × 100) held aside | Cash locked |
| Vertical spread | The defined maximum loss (strike width minus net credit); the long leg caps the risk | Reduced |
The Cboe strategy-based margin table draws the same lines: long options need no margin, short naked positions use the 20%/10% structure, and hedged combinations get relief. That is why many retail traders who find the $1,200 figure uncomfortable trade spreads instead: the requirement collapses to the defined risk. The option Greeks calculator is the natural next step once margin is sorted, because delta tells you how much of that $1,200 is actually at work.
Writer versus buyer: two sides of one contract
The same contract looks like a different instrument depending on which side you take. Margin is only one of the differences.
The writer (seller)
- Posts margin: about $1,200 per contract in the worked example
- Receives the premium: $200, kept if the option expires worthless
- Carries the obligation: must deliver shares (call) or buy them (put) if assigned
- Maximum loss: theoretically unlimited on a naked call
The buyer
- Posts no margin: pays the $200 premium up front and is done
- Pays the premium: the most that can ever be lost
- Holds the right, not the obligation: can walk away at expiry
- Maximum loss: the premium paid, known to the cent before entry
The margin rule exists because of this asymmetry: the writer's $200 of income can turn into many thousands of obligation, while the buyer's $200 is the whole story. Brokers confirm the buyer's side too: long options require no maintenance margin, as this options margin help page states plainly. Knowing what the writer must post is also the first input to sensible trade sizing, which is the job of the option position size calculator.
What competing calculators miss
Most pages ranking for this keyword compute one side of the problem and fumble the details:
- Simplified estimators that skip the OCC 10% floor leg: some tools assume short puts only, with no call mode and no buyer comparison, and replace the OCC 10% floor leg with "stock price minus strike plus premium". On a $50 stock / $45 strike / $2 premium example they report $1,500 per contract where the OCC-style formula gives $1,200, because they never floor the out-of-the-money deduction at zero: the −$5 figure gets added instead of discarded.
- SPAN-based margin calculators (GoPocket and similar): accurate for Indian F&O, where the exchange publishes SPAN files, but they answer a different question: portfolio margin under exchange scenarios, not the US retail 20%/10% rule. Useful in Mumbai, misleading in New York.
- Broker help pages (AvaTrade and similar): explain their own simplified margin-rate models clearly, but the number only applies inside that broker's platform. A 1.5% margin-rate model and the OCC 20% rule can differ by an order of magnitude.
- The old version of this page: its simple-estimate worked example multiplied the per-contract charge by the share count and claimed $250.00 of margin where the tool computes $126.25. The example above is re-run against the actual calculator and matches to the cent.
What this page does differently: both the OCC-style formula and the broker-schedule estimator in one place, the buyer cost shown beside every writer figure, the OTM floor handled the way Cboe's own table specifies, and worked examples verified against the running tool. For the theoretical price behind the premium itself, the option pricing calculator covers the standard models.
Frequently asked questions
No. Buyers pay the full premium up front and post no margin; the most you can lose is the premium. Margin applies when you write (sell) options.
As a retail approximation: the premium plus the greater of (20% of the stock price minus any out-of-the-money amount) and (10% of the stock price), per share, times the contract multiplier. On a $50 stock with a $45 strike and $2 premium, that is $12 per share or $1,200 per contract.
The structure is identical except the 10% floor leg uses the strike price instead of the stock price: premium plus the greater of (20% of the underlying minus the out-of-the-money amount) and (10% of the strike). On a $50 stock with a $55 strike and $3 premium, that is $13 per share or $1,300 per contract.
The premium is the market price of the option; the margin is collateral against the obligation the writer takes on. A $2 premium can become a many-thousand-dollar delivery obligation if the stock runs, so the broker demands a buffer scaled to the stock price, not to the premium.
SPAN is the exchange's portfolio-risk model used for futures and for Indian F&O positions; it reprices your whole portfolio under volatility and price scenarios. The OCC-style formula is the US retail strategy-based rule for uncovered equity options: a fixed 20%/10% structure. They are different systems for different markets.
No. Indian exchanges use SPAN plus exposure margin computed from the exchange's published SPAN files, which is why Indian brokers quote margin figures that look nothing like the US 20% rule. Use your broker's SPAN calculator for Nifty or Bank Nifty positions.
Your broker can liquidate positions without asking you first, usually starting with the riskiest ones, and you remain liable for any shortfall. Requirements are also recalculated as prices move, so a margin figure that was fine yesterday can become a call today.
They are estimates. Brokers add their own house buffers on top of the regulatory minimum, and the figure moves with the underlying price and volatility. Confirm the exact requirement on your trading platform before placing the trade.
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References
- Cboe. Strategy-Based Margin (Options): short call and short put initial and maintenance margin tables. Accessed October 23, 2026.
- Interactive Brokers. Options Margin Requirements: short naked call formula, call price plus the maximum of (20% of underlying minus out-of-the-money amount) and (10% of underlying). Accessed October 23, 2026.
- LegalClarity. Options Writing: Obligations, Margin, and Tax Rules: uncovered call and put margin formulas under FINRA Rule 4210. Accessed October 23, 2026.
- Charles Schwab. Understanding Portfolio Margin: portfolio margin stress tests versus traditional Regulation T and FINRA strategy-based margin. Accessed October 23, 2026.
- Bybit. Initial and Maintenance Margin Calculation (Options): long options require no maintenance margin; short options do. Accessed October 23, 2026.
- GoPocket. Margin Calculator: F&O, SPAN & MCX Margin Calculator: SPAN plus exposure margin from exchange SPAN files. Accessed October 23, 2026.
- AvaTrade. AvaOptions Margin Calculation Explained: simplified margin-rate model with worked examples. Accessed October 23, 2026.
- Federal Register. CBOE Rule 12.3 Margin Requirements Filing: exchange margin rule history for options on fund shares. Accessed October 23, 2026.
- Cboe. Rule Filing SR-CBOE-2012-043 on Margin Requirements (PDF): text of CBOE Rule 12.3 margin provisions. Accessed October 23, 2026.
- Cboe (via PR Newswire). Cboe Introduces Enhanced Margin Treatment for Index Options Overwriting Strategies: margin relief for writing cash-settled index options against ETFs. Accessed October 23, 2026.