The "daily Call" From Option Alpha: Options Trading | Stock Options | Stock Trading | Trading Online

Hey everyone. This is Kirk here again from optionalpha.com and welcome back to the daily call. Today, we are going to hopefully describe everything you need to know about margin calls and particularly, margin calls for options trading. Without going into too much nitty-gritty terminology because I think people get lost sometimes in the mud, like worrying about the specific price ranges and the specific percentages that are affected, I want to help you understand basically what happens with margin calls when you’re trading options. The first thing that we have to understand is that margin calls do not mean that you’re actually borrowing on margin. That usually happens when you invest in stocks. Somebody could borrow on margin, you could invest $50,000 into a stock and then borrow another $50,000, basically secured by that stock and that investment that you have and you can borrow on margin. Now, that cost money and there's margin interest that has to be charged by the brokers. That's not what we’re talking abo