I'm looking to open an account somewhere to sell vertical spreads and iron condors, but I only have 5k available atm to use. How much cash or margin do I need to sell spreads? I heard selling spreads instead of naked puts or calls reduces the margin needed by a lot? Someone enlighten me here.
how much margin do I need to sell spreads?
- Thread starter bearmace
- Start date
Try TD Ameritrade (ex Thinkorswim) as they provide really low SPAN margin on option selling with easy margin preview in their platform. I've studied also IB and Vision, TDAT is the best IMHO.
Yeah, spread's margin is much lower than naked, as its premium though
So spreads and naked premium/margin ratio will be approx. the same, but yes, it'll be simpler to start with spreads in a small account.
Yeah, spread's margin is much lower than naked, as its premium though
So spreads and naked premium/margin ratio will be approx. the same, but yes, it'll be simpler to start with spreads in a small account.The difference between the strike prices. If a call credit spread for example goes in the money, your short leg might be exercised.You need to sell at lower price those shares and buy them at a higher price (the right from the long leg)That difference is the margin requirement for a credit spread. I am not sure if the credit received upon execution of a credit spread is lowers the margin you need to post.
With such small account look for tight spreads between the legs, and definitely 'cheap' stocks