The organization master file, which contains program setup, currency and exchange information, is downloaded from the CME’s Web site or FTP site on the Internet. There are four main parts to SPAN: the organization master file, the risk parameter file, your positions and the calculated margin. To calculate the margin requires a program called PC-SPAN (Standard Portfolio Analysis of Risk), which was developed by the Chicago Mercantile Exchange (CME). If you do not know how much the margin is, you can not figure the return on investment. With futures the cost is the amount of the increase in margin of the entire futures account. If you sell an option, the margin is the cost. One method to compare one trade to another is by return on investment. Margins for futures are based on the risk of the overall futures portfolio, which is not so easy to calculate. The margin needed for a trade is easy to calculate you know what it’s going to be before you put the trade on. Margin requirements for options on equities are easily found with just a few clicks on a broker’s Web site.
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