Lol, I'm not disagreeing with you, that's weird though. Never thought about the margin requirement. There appears to be a disconnect here. But I agree that the RRSP and TFSA's allow long calls/puts and covered calls, no spreads (AFAIK) though...
Thanks for the input and sorry about the terminology. Why does this strategy require margin if I do not need it though. Is this just a rule that has no real solid backing? The only reason I ask is because my max loss doesn't even come near my account's overall value so realistically I do not need any margin... yes I do need it because it's required, but you get what I'm saying. It just seems like a very inconvenient and unnecesary requirement.
The strategy you want to do has a margin requirement so you need a margin account to do this strategy, simple as that. It's not the same thing as buying stock on margin, where you actually borrow money to purchase the stock.
I don't know the rules or what trades are allowed in a cash account, but I could see how a covered call is different from any other option trade (except a cash-secured put) because covered call uses no leverage, and no margin is required. A single long call or put would be fine in its form, but if exercised (e.g. an ITM IBM call), you might get a margin call if you don't have enough money in the account to purchase the stock.
Yes, but the strategy requires margin and so you need a margin account to trade it. That's how brokers make sure that you can cover losses without having to audit every account after every trade to make sure that there are sufficient funds to cover. Of course, brokers may have their own additional requirement.
Donnap has the right answers for you. Many brokers allow you to trade most option strategies in a cash account, even in IRA's. One exception of course would be any trade with an undefined risk. But that does not apply to your trade, but if you were trying to leg in by selling the short leg first, or even if you submitted both legs as separate orders simultaneously, which is what i suspect you did, it won't be allowed in a non-margin account. The reason is simple, if there is any chance that the short side will be filled before the long side then a disallowed position results. The way around this is to submit the long leg first and fill it. Then submit the short leg order. That will be allowed in a cash account. An alternative is to submit the orders linked together as a vertical (spread). Then both sides of the order will be filled simultaneously and your short calls will be "covered" by the long calls. Your problem really just boils down to how you submit the order.
it sounds like you tried to sell a call spread using options that are american style (prohibited for obvious reasons). try with a euro style option and see if they allow it. they should.. if they don't, that's unreasonable. the only other thing i can think of is that you have other options in this options chain and their system isn't properly detecting the spread.
Options House's platform allows you to add legs to the final order submission and recognizes the type of order your placing (spread, covered, naked etc.) so there is no issue with the how I'm placing it. I contacted support directly and they told me I'm not allowed to have a margin account and therefore I cannot trade this strategy because it requires margin. They do know what I'm trying to do and just told me flat out that It's not going to happen. I don't really understand all the details of a broker needing to audit your account every trade if you don't have margin? Even so I have touble seeing why this couldn't just be done automatically. I'm just trying to view it as simple as possible... I have cash, I have more cash than the trade requires, I cannot possibly lose more than my account value in the trade = I need margin for what purpose... what are the details? I guess I would need to know how a broker operates on the insides. Support did sound like if I had margin with my account I could do all types of things that could be "dangerous" which is true but why can't they limit my strategies? I don't see why a broker cannot lock my account on trading only a few specific types of strategies... it couldn't be that hard to integrate with todays software. Why can't they just make it so that I cannot trade all "dangerous" strategies but only trade spreads and covered's? What is the issue besides for "needing margin" that I don't technically need. I know this rule applies for all american indexs as I'm being told but it just seems bogus... the "rules" need to be changed. I'm not interested in a retirement account as I'de be periodically withdrawing money from the account and I bet the fees with doing so would defeat the purpose.
You need margin account because what happens if you get assigned on that short option? You need that margin to cover the assignment. Why dont you just open a margin account and be done with it? That is what they are saying about the american and euro options. Since you said that you wanted to see 2 10 calls then you would need $2000 to cover if those options got exercised and you got assigned. This is rare but probably your brokers reasoning for this. Then if you have the 2k to cover that, why not just open up a margin account with the 2k?