Under current margining rules, initial margins for uncovered call and put positions are normally larger than initial margins for futures contracts. Furthermore, margin calls for uncovered call positions are normally greater than margin calls for a futures position on the same value of the underlying asset, because the margin requirements for options result in margin calls of 130 per cent of the change in value of the underlying asset. In contrast, margin calls for uncovered puts are normally lower than those for futures on the same asset, because the marking to market of uncovered puts results in payment of 70 per cent of the change in value of the underlying asset. In addition, the margin requirements for covered option writing are less stringent than the margin requirements for hedging with futures, because there are neither initial nor marking-to-market requirements for covered option writing.

If exchange-traded options were marked to market on the basis of 100 per cent of the change in value of the premium, option margin flows would reflect position gains and losses and option hedge ratios. This approach is consistent with safeguarding the financial integrity of the option markets and enhances comparability of the margin requirements for options and futures.