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Margined option

An option whose premium is not paid up front but transferred in instalments through daily revaluation.

How to read the number

The buyer does not part with the whole premium at the trade, but both sides post collateral and are marked to market exactly as in a futures contract.

When the metric lies

The familiar line that a buyer risks only the premium reads differently here: until expiry the account needs free cash, not just the price already agreed.

Also known as: futures-style option

Related terms