Forex Options Margin Policy
Vanilla Options Margin policy
The margin requirement on FX Options is calculated per currency pair, ensuring alignment with the concept of tiered margins, and per maturity date. There is a ceiling to the margin requirement that is the highest potential exposure across the FX Options and FX positions multiplied by the prevailing FX (spot) margin requirement. This calculation also takes into account potential netting between FX Options and FX spot and forward positions.
On limited risk strategies, e.g. a short call spread, the margin requirement on an FX Options portfolio is calculated as the maximum future loss.
Tiered margin rates are applicable to the FX Options margin calculation when your margin requirement is driven by the prevailing margin rate and not the maximum future loss. The prevailing spot margin levels are tiered based on USD notional amounts, the higher the notional amount potentially the higher the margin rate. The tiered margin requirement is calculated per currency pair. In the FX Options margin calculation, the prevailing spot margin requirement in each currency pair is the tiered or the blended margin rate determined on the basis of the highest potential exposure across the FX Options and FX positions.
For specific explanation and detailed FXO examples, please click here.
An option is categorised as a red product as it is considered an investment product with a high complexity and a high risk.
Saxo Capital Markets is required to categorise investment products offered to retail clients depending on the product’s complexity and risk as: green, yellow or red. Please refer to our "Product Risk Categorisation".