Replies to post #9767 on Organovo Holdings, Inc. (ONVO)

[rongreen]

I have sold Puts in every month currently available out to August, all $3.00 and $3.50. I've completely exhausted my "Margin Buying Power" for now. Thing is, you don't actually incur any Margin Interest Expense this way, unless the stock is actually put to you. I asked my broker for an explanation of how the Buying Power is calculated and received this answer:

Calculating Buying Power – (Non-Pattern Day Traders)
These formulas assume the account’s equity is $2,000 or greater.

Non-Marginable BP will be the lower of:
SMA + BDP balance – restricted funds – Fed requirements on open, opening orders
Maintenance Excess + BDP balance – restricted funds – Maintenance requirement on open, opening orders
Marginable BP will be lower of:
(SMA + BDP balance– Fed requirement on open, opening orders) / .50
(Maintenance Excess + BDP balance – Maintenance requirement on open, opening orders ) / .30 (plus any account level deviations)

Here is the put calculation when you short.
Calculations and Examples

Note: the calculations below will work whether opening or closing a Naked Put

Initial Requirement: take the greater of A or B:

Put options types: Broad/Narrow index, Equity and Adjusted

A. 100% of option proceeds plus 20% of underlying security/index plus any CUSIP deviation on the underlying security/index + account level deviation and less out of the money amount, if any*.

B. 100% of option proceeds plus 10% of the put’s exercise price (i.e. 10% of the stock value as if it was priced at the strike price) plus any CUSIP deviation on the underlying security/index + account level deviation

Maintenance Requirement: take the greater of A or B:

Put options types: Broad/Narrow index, Equity and Adjusted

A. 100% of option market value plus 20% of underlying security/index plus any CUSIP deviation on the underlying security/index + account level deviation and less out of the money amount, if any*.

B. 100% of option market value plus 10% of the put’s exercise price (i.e. 10% of the stock/index value as if it was priced at the strike price) plus any CUSIP deviation + account level deviation.

Note: for either A or B

20% of underlying security = # of contracts x closing price of underlying stock x multiplier

10% of put's exercise price = # of contacts x strike price of put x multiplier

*Note: Proceeds received from sale of Put/s may be used to reduce the initial requirement