Hypothetical question: Let's say I trade the following: SPY 292 Put Sell to Open 293 Put Buy to Open 100 option contracts 0.50 Debit per contract Now if I close just the 292 Put Buy to Close , will the platform let me trade 292 Put Sell to Open i.e. same leg again (at a different price) without complaining about "buying power" . Since this trade by itself is a short trade but not when you factor in the 293 position I still have on I hope it recognizes I have the other position. If not, can I call in the company to do this trade ?
Yes, it should because the short put is still protected. The other way around would be more difficult. Daytrading the long side would leave you short for a period of time and you would need to have the margin for that.
protected from the long position always being there, right ? Are you saying it would be only be possible with margin (or having enough cash in the account) and impossible without those ?
Broker will look @ all positions in the account to calculate margin. Doesn't matter if you opened the trades as a pair or separately. YES, you can close the "short 292 put" position but your margin requirements will increase since the cost of your trade went from .50/contract to .75/contract ($5,000 to $7,500) if the 292 puts were sold for .25/contract. If you close the "long 293 put" position & hold your "short 292" position, your margin requirements will increase significantly since your "short 292 put" position has no protection. You can then re-open the "short 292 put" position again @ any price and your margin requirement will drop again.
@Bum and @Robert Morse thank you both. I know one such broker which is totally not that smart and who S/W has bugs as well