SPAN and Day Trade Margins
by John Thorpe, Senior Broker
Dive into Margin creation
Day trade margins are back to “normal” day trade valuations.
Remember Trump highlighted the need to pass and extend his 2017 tax cuts which are set to expire at years end if a new bill wasn’t passed to extend those tax credits.
Well, we are on the doorstep of that request. Watch for equity index strength if it passes in the house this week and weakness if it doesn’t. Memorial Day weekend was his target to have the legislation passed.
A quiet data day tomorrow.
On a different note, I hear a lot about from my day traders want to understand more clearly how margin is set and when can we expect reduced day trade margins.
Here’s the short version: Margins are set by the exchange based on a number of factors then the clearing houses adjust day trading parameters based on the exchange Initial margin. Volatility is the biggest factor to affect exchange minimum initial margin.
Here’s the long story from the CME:
https://www.cmegroup.com/solutions/risk-management/performance-bonds-margins/span-methodology-overview.html
Market volatility is here to stay for the foreseeable future with it’s ebbs and flows.
Choose your opportunities wisely. Today’s market swings were largely back to normal ( pre tariff talk normal)
Tomorrow:
Econ Data: EIA Energy stocks.
FED Speak: One speaker Barkin @ 11am CT
Earnings: TJ Max, Lowe’s, Medtronic, Target
Tariff news: Anything goes!
SPAN Methodology Overview
CME SPAN is a market simulation-based Value at Risk system that allows you to assess risk on a portfolio basis. Explanations and examples of risk arrays and SPAN analysis are included. |
