I bet no one will do a 4m trade with you with merely 100k in cash. Try and see what happens, the worst case is reducing to 10% of the positions.
Ya but it's a spread so really 100 short calls @ 416, and 100 long call options @ 417 is a $10,000 trade since that's the maximum risk, so that is the only margin they should require...and going but my tos paper trade that's exactly how it works.
Update. So been reading the literature at TD: Uncovered naked calls - 100% of premium LESS any otm amount PLUS subject to minimum % requirement on the underlying interest. the minimum percent for a short sale is 30% but not sure what it is in a spread.
you just have to look at the short call exposures, any long calls are icing on a cake, doesn’t count in the margin mostly, it is cash out.
Yeah I was thinking the only margin exposure would be the spread risk ..but apparently there will be a % obligation on the underlying committment.
If the maturities are the same then the spread is the margin unless the broker has some different rule.
we are in a circular logic, the answer is no. the trade(s) entered are as a separate position since you can close any numbers of positions on either side as you like. any broker won’t front you the money, at best you can have exchange margin required.
a proper broker runs your margin against your aggregate position regardless how it’s executed. If the position changes, the margin changes. The occ has a whole list of how Martin is calculated for various option spreads. here is the rules based margin for interactive brokers: https://www.interactivebrokers.com/en/trading/margin-options.php
portfolio margin may give more leverage but it works the same as reg t, minimum balance is required. can’t trade 4m size with 100k account. that’s that.