Depending on the options strategy you use, we may hold stocks or cash as collateral to make sure you can cover the position in case of assignment.

Collateral held in stock

• Selling to open a covered call: You’ll need 100 shares per contract of the underlying stock in your portfolio to cover the position. As long as the position is open, you won’t be able to sell 100 shares of the underlying stock.

Collateral held in cash

• Selling to open a cash-covered put: We’ll set aside enough money from your portfolio to buy the underlying stock at the contract’s strike price.
• Opening a credit spread: We’ll set aside enough cash from your brokerage account to cover your theoretical maximum loss. When opening a debit spread the long leg covers the short leg already and if you don’t hold the stocks you can not close the long leg as long as the short leg is open.

You can check exactly what collateral is held on the detail page of the underlying stock.

When you place an options order, we’ll hold the appropriate collateral (cash or stock). The same way we hold enough cash to fill your pending order when you open an equity position, we’ll hold enough cash or stocks to cover your option position until the order is cancelled or filled.