Margin and Escrow Receipts

Introduction

This microwebsite www.cboe.com/margin provides a summary of the margin requirements and escrow receipt program that apply to options traded on the Chicago Board Options Exchange (CBOE). This is only a brief summary and should only serve as a supplement to careful review of relevant CBOE rules and federal securities laws dealing with margin requirements. For more information on margin requirements for options, please contact CBOE's Department of Member Firm Regulation at (312) 786-7718.

Key sections of this microwebsite cover the following topics:

• Strategy-based Margin rules have been applied to listed options for more than three decades.



• New Portfolio Margin rules for equity options and other positions become effective in April 2007. (In 2005 the SEC approved portfolio margining for certain stock index options positions.) In certain cases the new portfolio margining requirements may be applied in lieu of the strategy-based margin requirements.



• Margin Requirements Examples for Sample Options-based Positions. A 2007 table providing comparisons of strategy-based and portfolio margin requirements for 38 different positions.



• Security Futures Margin Examples. A document with examples of synthetic long ETF positions (options) offset with an index futures contract that is not eligible for portfolio margining compared to examples using the same synthetic ETF positions offset with a security futures contract on a broad-based ETF.



• Escrow Receipts. Many institutional accounts maintain their assets at a custodian bank, not at a broker-dealer. Exchange margin rules allow a broker-dealer to accept an "escrow agreement" in respect of short options, in lieu of cash or securities.



• Investor Protection



• Margin Calculators