Vertical credit spread

[droid17]

Hi all

I have a few questions about vertical credit spreads. I am using Ameritrade and it looks like I can sell a bull put spread in one transaction setting the net credit limit to what I want. I am guessing I can close this same spread by setting the debit limit when I want to close?

Also how does the maintenance requirement work for this type of spread. Do I just have to have the cash for the difference between the two strike prices, or do I have to have the cash to buy the stock for the sold puts?


Thanks,

Droid.

 

[dagnyt]

Quote from droid17:

Hi all

I am guessing I can close this same spread by setting the debit limit when I want to close?

Correct

Also how does the maintenance requirement work for this type of spread.

Thanks,

Droid.

You must have the difference between the strikes x 100 cash in your account.

You can use the credit towards that cash requirement.

The requirement never changes. If you are eventually assigned an exercise notice, then the position is different and you would have to pay for the stock.

Mark

 

[droid17]

Thanks Mark,

So as long as I close the spread before exp then I only have to worry about the strike price diff x 100 per contract, right?

 

[MTE]

Quote from droid17:

Thanks Mark,

So as long as I close the spread before exp then I only have to worry about the strike price diff x 100 per contract, right?

Yes, unless you are assigned early.

And to answer your question on the closing order, yes, you can use the same spread order with the net debit.