Portfolio margin vs strategy-based margin

Summary

Portfolio margin assesses risk across the whole portfolio, while strategy-based margin applies rule-based requirements to defined positions. The article notes both within the OCC and FINRA framework for equity and index options.

Definition

Portfolio margin is a risk-based method that sets margin by looking at the net risk of the portfolio as a whole, whereas strategy-based margin uses prescribed rules tied to specific option positions or combinations. In the article, equity and index options cleared at OCC fall under FINRA Rule 4210 for customer margin, with portfolio margin available to eligible accounts. This distinction matters because margin requirements can differ materially depending on account type and position structure, even when the underlying option looks similar on screen. The article treats this as part of the broader clearing and risk framework that traders should confirm before trading, especially when comparing securities options with futures options that use SPAN-style methodologies instead.

Sources

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