Cash/Margin Requirement for Vertical Put Spread

[earth_imperator]

mervyn and ondafring, so then how much ~ is the maintenance margin requirement? $900, $880, $225 ?

 

[mervyn]

Margin Impact 352.93.

if you can't fund, then probably spread is not your trade.

 

[earth_imperator]

Here's an example trade using some approximate data from the initial posting, ie.
Spot=10.41 DTE=163
ShortPut: K=9 Pr=4.30 (IV=208)
LongPut: K=4 Pr=0.50 (IV=145)

MaxProfit=3.8
MaxLoss=1.2

B/E: 5.20 (-50.05% off Spot)

Here's the PL diagram: https://optioncreator.com/stvsden

Can someone calculate the net profitability of this trade using realistic margin requirement as basis, for the case when spot at expiration is the same?

 

[ondafringe]

Margin Impact 352.93.

if you can't fund, then probably spread is not your trade.

So most brokers require minimum of $2k to open a margin account.

FINRA requires minimum margin equal to 25% of the market value.

Brokers must honor FINRA, but can increase margin requirements to their liking.

For the example trade in this thread, FINRA requires $225, your broker requires $352.93, Trade Station requires $500.

Is that correct?

And since the margin account has minimum $2k, this trade goes through.

Is that correct?

 

[mervyn]

So most brokers require minimum of $2k to open a margin account.


And since the margin account has minimum $2k, this trade goes through.

Is that correct?

2k+required margin

 

[ondafringe]

2k+required margin

Okay. I think I got it. Thank you!

 

[earth_imperator]

2k+required margin

Can you calculate the profitability of this trade using margin requirement also in percent?
Is this calculation correct: 352.93 / (2000 + 352.93) * 100 = 15% ?

But in a CashAcct one gets this result for the same trade:
CashRequirement = 9 - 4.3 + 0.5 = $5.20
When Spot at expiry is the same as the initial Spot, then :
PL = 3.80
PL% = 3.80 / 5.20 * 100 = 73.08%

What do you say now? CashAcct is almost 5 times better than MarginAcct !
Isn't it? After all it's pure maths. No cheating here, everybody can verify it and convince him/herself of this fact.

I always suspected that MarginAcct is just a BIG FRAUD, a marketing gag! Here's the naked proof, Ladies and Gentlemen! Enjoy The Truth!

 

[earth_imperator]

Minor correction: The following line...

Is this calculation correct: 352.93 / (2000 + 352.93) * 100 = 15% ?

...must of course be:

Is this calculation correct: 380.00 / (2000 + 352.93) * 100 = 16.15% ?

And the ratio "almost 5 times" comes of course from this comparison:
(2000 + 352.93) / 520 = 4.52

Or this way:
73.08 / 16.15 = 4.52