Option Strategy refers to a portfolio of an account, typically an investment strategy that includes stock and option, for the purpose of hedging, to reduce the risk exposure of the positions. As the risk exposure will be mitigated by using option strategy, client's margin requirement will be lowered in a way that commensurate with the change of the exposure.
Please contact our customer service team for more information about how to enable the option strategy of your account.
Tiger currently offers two option strategies:
1. Covered Call: a portfolio consists of short position of a call option contract and long position of 100 shares with the same underlying U.S. stock.
2. Covered Put: a portfolio consists of short position of a put option and short position of 100 shares with the same underlying U.S. stock.
Option strategies margin requirements warnings
1. You will benefit from a lower margin requirement if the option strategy is being used in your account as the risk is mitigated.
2. However, if any part of the position of your option portfolio is closed by you, which means your option strategy remains invalid, your account is therefore no longer benefitted by the lower margin requirement. Please be aware if the margin call is triggered, other positions of your account may be liquidated by Tiger. As such, please ensure sufficient funds are available in your account before you liquidate any position.
3. If you decide to liquidate position of your option portfolio, we suggest you liquidate the option contract first to avoid the increase of the margin requirement. However, if you liquidate the stock of the portfolio first, and your order only partially executed in the market, which means your option strategy remains invalid, this will lead to margin requirements are applied to both stock and option positions, which will aggregates the margin level of your account.
4. Please note the option strategy can not be used on stocks or options that code or contract multiplier are changed due to corporate actions. If the underlying asset of your portfolio happens to be the change as aforementioned, this may lead to your option portfolio invalid and increase of the margin level of your account as result, please always ensure sufficient funds are available in your account to avoid the forced liquidation.