Q: I noticed that in the video mod4 trade selection IWM, the margin required before the trade is filled is $488. As soon as the order is filled, the margin requirement drops to zero. Can you please explain how this happens.
A: I haven’t reviewed the video you refer to but I believe this is the reason:
Long options do not have margin requirements – you purchase them – so when the analyze tab shows $488 ‘margin’ it’s not actually margin but a reduction in buying power instead.
That’s why after the trade is placed you do not see a margin
– it goes into your account and the your buying power is reduced by the cost of the option.