Part 6/10:
Place the Trade: Use your brokerage platform's order entry to sell the put option.
Manage Your Position: You can buy back the option earlier if the market moves favorably, locking in profits or limiting losses.
Managing Margin and Capital Requirements
For traders with smaller accounts, understanding margin requirements is essential:
Margin Accounts: Brokers typically require only a fraction of the total risk—often around 20%. For example, a $21 strike put on an $2,100 stock position might require as little as $372 in margin.
Cash Secured Accounts: You must hold the full amount of $2,100 upfront, tying up more of your capital.