Margin utilization around expiry
When a listed option with a stock or ETF as the underlying asset approaches expiry and is In-The-Money (ITM) or close to being ITM, our risk system will begin calculating the cost of acquiring the underlying stocks and reserve the necessary cash accordingly.
Specifically, two hours before expiry, our risk system begins reserving increasing amounts of cash on a minute-by-minute basis. This ensures that you have the necessary funds to acquire the underlying stocks at the strike price upon expiry. Please note that this reserved cash is in addition to the margin required for maintaining all margin positions.
The cash reserved by the risk system will appear as Initial Margin Requirement and Maintenance Margin Requirement, which may cause a spike in your Margin Utilization around expiry. If there are insufficient margin collateral funds in your account, the priority is to close out only the stock options expiring on the same date. However, depending on the circumstances, other margin positions may also be closed.
At expiry - meaning
- If the Listed option is In-The-Money AND you have sufficient cash to buy the underlying stock, you will be assigned the Listed option to buy at the strike price.
- If the Listed option is In-The-Money AND you do NOT have sufficient Cash to buy the underlying stock, Saxo will close out your Listed option position before expiry.
If you want the underlying stocks, ensure there is enough cash in your account at least two hours before expiry.
On rare occasions when the cash in your account changes rapidly (or under other special conditions), our system may assign stocks to your account even if there is insufficient cash, resulting in a cash deficit. In such cases, we will send you a fund-in request notification. If the deficit is not covered, we will proceed to sell the shares:
HK Shares: The deadline is 1 hour before the HK market closes.
EU/US Shares: The deadline is 45 minutes after the EU/US market has opened.
More details
You can get more details on the impact of expiring options on your margin utilization using the Expiring Options Closeout Monitor report:
- Go to the main menu
> Account activity & reports > Expiring options closeout monitor report (Data will be available 4 hours before the option's expiration).
- A clickable badge
will also be shown next to the margin utilisation from 4 hours before the upcoming option expiry. Clicking on it will take you to the report.
The report provides a comprehensive overview of the current margin utilization as well as the estimated utilization factoring the option’s expiry. It also gives a breakdown by Expiry and Underlying:
- Estimated OEM: The estimated option expiry margin requirement for all options that could be in-the-money.
- Weight: The weight linearly increases during the closeout risk period (last 2 hours before the expiry time)until it reaches 100%.
- Current OEM = The reserved option expiry margin within the closeout period i.e. Estimated OEM x Weight.