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SINGLE-NAME CREDIT EVENT BINARY OPTIONS MINIMUM MARGIN REQUIREMENTS

Initial and Maintenance Margin

Purchases of Single-Name Credit Event Binary Options (known as Single-Name CEBOs or Credit Default Options) must be paid for in full. Writers of Single-Name CEBOs must deposit / maintain 100% of the cash settlement amount. Single-Name CEBOs have no value for margin equity purposes, except in the case of a Qualified Customer (see below).


Initial and Maintenance Margin - Qualified Customer1

Purchases - 20% of the purchase amount*

Sales (short) - the lesser of:

  • option proceeds* plus 20% of the cash settlement value, or
  • the cash settlement value

*For calculating maintenance margin, use option current market value instead of purchase amount / option proceeds. Single-Name CEBOs in the margin account of a Qualified Customer may be valued at current market value for margin equity purposes. Additional margin may be required pursuant to Exchange Rule 12.10.


Cash Account

The sale (short) of a Single-Name CEBO is deemed a covered position, and eligible for the cash account, provided any of the following is either held in the account at the time the option is written or is received into the account promptly thereafter:

  • cash or cash equivalents equal to 100% of the cash settlement amount,

    • or
  • an escrow agreement

The escrow agreement must certify that the bank holds for the account of the customer as security for the agreement (A) cash, (B) cash equivalents, (C) one or more qualified equity securities, or (D) a combination thereof having an aggregate market value of not less than 100% of the cash settlement amount as defined in Rule 29.1 and that the bank will promptly pay the member organization the cash settlement amount in the event of a Credit Event as defined in Rule 29.1. (Note, the Options Clearing Corp. is not currently accepting escrow agreements for Single-Name CEBOs.)

1 A "Qualified Customer" is defined as a person or entity that owns and invests on a discretionary basis no less than $5,000,000 in investments.




Options involve risk and are not suitable for all investors. Prior to buying or selling an option, a person must receive a copy of Characteristics and Risks of Standardized Options (ODD). Copies of the ODD are available from your broker, by calling 1-888-OPTIONS, or from The Options Clearing Corporation, One North Wacker Drive, Suite 500, Chicago, Illinois 60606. The information on this website is provided solely for general education and information purposes and therefore should not be considered complete, precise, or current. Many of the matters discussed are subject to detailed rules, regulations, and statutory provisions which should be referred to for additional detail and are subject to changes that may not be reflected in the website information. No statement within the website should be construed as a recommendation to buy or sell a security or to provide investment advice. The inclusion of non-CBOE advertisements on the website should not be construed as an endorsement or an indication of the value of any product, service, or website. The Terms and Conditions govern use of this website and use of this website will be deemed acceptance of those Terms and Conditions.