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Buying options - maximum risk


Guest Canberra

Question

Guest Canberra

Hi all

I'm new here and looking to buy some options as a hedge.

 

On this page http://www.ig.com/au/options-product-details

It says, at note 10,

"10. The margin requirement for buying a stock index option is the opening price (or premium) multiplied by the contract value (per point in the underlying market). This is the maximum possible loss on the position."

 

It appears that this note only applies to some markets. My understanding is that the margin is the maximum possible loss is true for ALL purchased options?

 

At the moment I'm planning on buying some December Puts on the ASX200 and some December calls on gold.

Thanks in advance

 

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Hi there, thanks for your query.

 

You are right about the margin requirement on purchased options. The margin requirement will be the maximum possible loss on the trade and this applies for options on any underlying market, not just for index options.

 

If you have any further queries on this please let us know.

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