When you sell options, Aries requires collateral to ensure you can fulfill your obligations if assigned.
Covered calls
When you sell a covered call, your shares serve as collateral. You must own 100 shares of the underlying stock for each call contract you sell.
Cash-secured puts
When you sell a cash-secured put, you need enough cash to buy 100 shares at the strike price. This cash is held as collateral.
How collateral works
- Collateral is set aside when you open the position
- You can't use collateralized shares or cash for other trades
- Collateral is released when the position is closed or expires
Example
You want to sell 1 cash-secured put on XYZ stock with a $50 strike price.
Required collateral: $50 × 100 shares = $5,000
This $5,000 is held in your account until the put expires or you close the position.