Margin requirement (Options)

Similar financial terms

Variation margin
The variation margin is an extra margin required to bring the balance in a margin account up to the initial margin when there is a margin call.

Gross margin
The percentage of gross profit (sales minus direct costs) to sales, which should remain fairly consistent when sales rise or fall.

After-tax profit margin
The ratio of net income to net sales.

Profit margin
Indicator of profitability. The ratio of earnings available to stockholders to net sales. Determined by dividing net income by revenue for the same 12-month period. Result is shown as a percentage.

Original margin
The margin needed to cover a specific new position.

Operating profit margin
The ratio of operating margin to net sales.

Net profit margin
Net income divided by sales; the amount of each sales dollar left over after all expenses have been paid.

Net operating margin
The ratio of net operating income to net sales.

Marginal tax rate
The tax rate that would have to be paid on any additional dollars of taxable income earned.

Marginal
Incremental.

Margin of safety
With respect to working capital management, the difference between (a) the amount of longterm financing, and (b) the sum of fixed assets and the permanent component of current assets.

Margin call
A demand for additional funds because of adverse price movement. Maintenance margin requirement, security deposit maintenance

Margin account (Stocks)
A leverageable account in which stocks can be purchased for a combination of cash and a loan. The loan in the margin account is collateralized by the stock and, if the value of the stock drops sufficiently, the owner will be asked to either put in more cash, or sell a portion of the stock. Margin rules are federally regulated, but margin requirements and interest may vary among broker/dealers.

Margin
This allows investors to buy securities by borrowing money from a broker. The margin is the difference between the market value of a stock and the loan a broker makes.

Maintenance margin requirement
A sum, usually smaller than -but part of the original margin, which must be maintained on deposit at all times. If a customer's equity in any futures position drops to, or under, the maintenance margin level, the broker must issue a margin call for the amount at money required to restore the customer's equity in the account to the original margin level.

Before-tax profit margin
The ratio of net income before taxes to net sales.

Buy on margin
A transaction in which an investor borrows to buy additional shares, using the shares themselves as collateral.

Contribution margin
The difference between variable revenue and variable cost.

Net interest margin (NIM)
The difference between interest income and interest expense as a percentage of assets.

Equitize a Margin Call
An event whereby a previously unsatisfied margin call is eliminated by an effective transfer of ownership. In 1998, Long Term Capital Management transfered a portion of ownership to its creditors. In some respects, it was a debt for equity swap.

Variation Margin
Payment made on a daily or intraday basis by a clearing member to the clearing organization based on adverse price movement in positions carried by the clearing member, calculated separately for customer and proprietary positions.

Sinking fund requirement
A condition included in some corporate bond indentures that requires the issuer to retire a specified portion of debt each year. Any principal due at maturity is called the balloon maturity.

Reserve requirements
The percentage of different types of deposits that member banks are required to hold on deposit at the Fed.

Materials requirement planning
Computer-based systems that plan backward from the production schedule to make purchases in order to manage inventory levels.

Static options replication
A static options replication is a procedure for hedging a portfolio that involves finding another portfolio of approximately equal value on some boundrary.

Options on physicals
Interest rate options written on fixed-income securities, as opposed to those written on interest rate futures contracts.

Options contract multiple
A constant, set at $100, which when multiplied by the cash index value gives the dollar value of the stock index underlying an option. That is, dollar value of the underlying stock index = cash index value x $100 (the options contract multiple).

Options contract
A contract that, in exchange for the option price, gives the option buyer the right, but not the obligation, to buy (or sell) a financial asset at the exercise price from (or to) the option seller within a specified time period, or on a specified date (expiration date).

Barrier options
Contracts with trigger points that, when crossed, automatically generate buying or selling of other options. These are very exotic options.

Basket options
Packages that involve the exchange of more than two currencies against a base currency at expiration. The basket option buyer purchases the right, but not the obligation, to receive designated currencies in exchange for a base currency, either at the prevailing spot market rate or at a prearranged rate of exchange. A basket option is generally used by multinational corporations with multicurrency cash flows since it is generally cheaper to buy an option on a basket of currencies than to buy ...

Chicago Board Options Exchange (CBOE)
A securities exchange created in the early 1970s for the public trading of standardized option contracts.

Dealer options
Over-the-counter options, such as those offered by government and mortgage-backed securities dealers.