I've been trading credit spreads for a short time and trying to compare my returns relative to the entire portfolio and relative to the amount I am putting at risk. My question is which is the best way to quantify VaR when selling option spreads? And I am defining VaR as the largest possible loss, assuming a 100% loss on a position. For ease, numbers will be small. The two ways I am using are: 1) Sell X Dec 35/40 call spread for 2.00. Total VaR is $500/co., given the difference in strikes. 2) Sell X Dec 35/40 call spread for 2.00. Total VaR is $300/co, because the $200 premium is unrealized until opex. My contention is to value VaR (semantic redundancy aside) based on #2, here's why. Given a $5,000 account, assuming the above sale, market value will be $5,200. Say X trades up to $50 and you are forced to cover the C/S at $5.00, losing the $200 premium and giving up $300 to cover the short, leaving the account valued at $4,700. So based on the above, should: Difference in strikes - Premium collected = VaR ???