Trade shows 2 different margin requirements

[Derrenoption]

Hello,

I have a trade that look like this:
buy 1 call contract, strike 210, price 1.99
sell 2 call contract, strike 225, price 0.57
buy 2 call contract, strike 240, price 0.19

Now I try to calculate margin requirement for this trade and have come up with
2 different calculation. As seen, I break down the trade i 2 different ways and come up with
2 different margin requirments.

It seems that both approaches are correct but gives a big difference in margin requirements.
I wonder which one is correct, I might be missing something?

Thank you!

---------------------------------------------------------------
Margin calculation 1
---------------------------------------------------------------
buy 1 call contract, strike 210, price 1.99
sell 1 call contract, strike 225, price 0.57
$142.00

sell 1 call contract, strike 225, price 0.57
buy 1 call contract, strike 240, price 0.19
$1,462.00

buy 1 call contract, strike 240, price 0.19
$19
= $1623 (Margin required)


---------------------------------------------------------------
Margin calculation 2
---------------------------------------------------------------
sell 2 call contract, strike 225, price 0.57
buy 2 call contract, strike 240, price 0.19
$2,924.00

buy 1 call contract, strike 210, price 1.99
$199
= $3123 (Margin required)

 

[Robert Morse]

Margin calculation 2 is correct. Optimize by pairing off spreads 1st then use the leftover. That does not mean your clearing firm will do that every time.