Options Margin Calculator
Free, no login · By OptionClaws · Updated 2026-09-28
Selling an option without the shares or a protective long option ties up margin, and the amount decides your return on capital. This calculator applies the standard Reg-T initial margin formula to naked puts, naked calls, short strangles, and short straddles, shows cash-secured put collateral for comparison, and works out the premium, return on margin, annualized return, and breakevens. It shows each step of the formula so you can check it against your broker.
Illustrative inputs; enter your own. Results are calculated in your browser from the numbers you enter.
The formula, step by step
- Put $95.00: out of the money by max(0, $100.00 - $95.00) = $5.00. 20% test: 0.20 x $100.00 - $5.00 = $15.00. 10% test: 0.10 x $95.00 = $9.50. Greater test plus premium: $15.00 + $1.30 = $16.30 x 100 = $1,630.00 per contract.
- Total: $1,630.00 x 1 = $1,630.00. Return on margin: $130.00 / $1,630.00 = 8.0%.
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How to use the options margin calculator
- Choose the position: naked put, naked call, short strangle, short straddle, or cash-secured put.
- Enter the current stock price.
- Enter the strike and premium per share for each short option. A straddle uses one strike for both the put and the call.
- Enter the number of contracts and the days to expiration.
- Read the requirement and the worked formula below it, then the return on margin and annualized return.
How it's calculated
For one uncovered option, the Reg-T initial requirement per share is the greater of two tests, plus the premium received. The first test is 20% of the stock price minus the amount the option is out of the money (zero if it is at or in the money). The second is a floor: 10% of the stock price for a call, or 10% of the strike for a put. The total is multiplied by 100 per contract. This is the same formula the OptionClaws scanner uses to rank naked puts and short strangles by return on margin.
Short strangles and straddles use the combined rule: compute the requirement for the put and the call separately, take the larger one, and add the other side's premium (its premium only, not its full requirement). Only one side can finish in the money, which is why the smaller side is not margined in full.
- Out-of-the-money amount: stock price minus strike for a put, strike minus stock price for a call, never below zero.
- Naked option requirement: [max(20% of stock price minus out-of-the-money amount, 10% of the stock price for a call or of the strike for a put) plus premium] times 100 per contract.
- Strangle or straddle requirement: the larger side's requirement plus the smaller side's premium times 100.
- Cash-secured put collateral: strike times 100 per contract. The same put's naked requirement is shown next to it.
- Return on margin: total premium received divided by the requirement. For a cash-secured put the base is the cash reserved, and the scanner's strike-minus-premium basis is shown too.
- Annualized return: return on margin times 365 divided by days to expiration, simple scaling.
- Breakevens: strike minus premium for a put, strike plus premium for a call; a strangle or straddle subtracts and adds the total premium.
Assumptions and limitations
- This is the Reg-T initial requirement at the prices you enter. Brokers can set higher house requirements, so your broker's number may be higher.
- Margin is recalculated as the stock and the option move. The figure here is for entry only, and a move against the position raises it.
- Portfolio margin accounts use a different, risk-based method and are not modeled.
- Breakevens are at expiration. Early assignment, dividends, fees, and commissions are not included.
- Return on margin measures premium against capital tied up, not risk. The dollar loss on a naked option can be far larger than the margin.
Frequently asked questions
- How is margin calculated on a naked put?
- Take the greater of 20% of the stock price minus the out-of-the-money amount, or 10% of the strike (10% of the stock price for a call), add the premium, and multiply by 100. A $95 put on a $100 stock for $1.30: max(20 minus 5, 9.50) plus 1.30 is $16.30, or $1,630 per contract.
- How is margin calculated on a short strangle?
- Work out the naked requirement for the put and the call separately, keep the larger one, and add the other side's premium times 100. You are not charged full margin on both sides because only one can end up in the money.
- Why does a naked put show a much higher return than a cash-secured put?
- The premium and the worst-case dollar loss are the same; only the capital base changes. Dividing the same premium by a margin requirement that is a fraction of the strike gives a much larger percentage, and a much larger loss relative to that capital if the stock falls hard.
- Is return on margin the same as return on risk?
- Not for naked options. Margin is what the broker holds today; the loss can exceed it. For a naked put the true worst case is the strike minus the premium, times 100, and for a naked call it is unlimited.
- Will my broker require the same amount?
- Often not exactly. Reg-T is the regulatory minimum for initial margin; many brokers add house requirements, especially for volatile or low-priced stocks, and require approval for uncovered options at all.
Related
For education only, not investment advice. Results are model-based estimates from the inputs you enter and exclude fees, early assignment, and dividends. Options involve substantial risk and are not suitable for every investor. See our Terms of Service.