Using Standard Portfolio Analysis of Risk Margin (SPAN) to your Advantage

Technically Speaking Futures, Options, and Stocks e-magazineTechnically Speaking digital trading magazine recently featured an article written by Carley Garner regarding SPAN commodity portfolio margining tips and tricks.

*This article is an excerpt from Garner's latest futures and options trading book, Higher Probability Commodity Trading book by Carley Garner.

CONTROLLING FUTURES MARGIN WITH NET DELTA


The most common question I receive from beginning traders is, “What do I do if I receive a margin call?” The answer is simple: Don’t panic! In most situations, there is usually an easy fix to alleviate a margin problem that doesn’t involve wiring funds or offsetting trades at unfavorable prices.

Ideally, margin call avoidance is the best policy. However, even the most responsible traders will encounter the predicament sooner or later. HPCT Cover 350x450Rather than simply throwing in the towel and liquidating positions or adding additional funds to what might become equivalent of a money pit, there are an unlimited number of ways to influence the exchange-required margin in your favor via risk reduction, or at least the perception of such. Naturally, lower risk equates to lower margin and, in most cases, lower profit potential, but for those who find themselves in a dire margin situation, beggars can't be choosers.

 

 

Continue reading this article on futures and options trading margin by Carley Garner in Technically Speaking e-Magazine by clicking the icon below and turning to page 16. 

 

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