That's only true if it's on expiration and both sides are ITM. If you get early assignment, that's not the case. And you can only get assigned on the short side of a spread...which circles me back to:
Hi First I want to say I think this is a very interesting question. In my opinion, if your short leg goes itm doesn't happen anything, because your risk is well defined. But if you are early assigned then maybe there is a problem. Imagine the stock price decrease bellow your long put, and your puts are early assigned, the next morning you will be long stock, and you won't have margin to mantein the stock so you will have 10 minutes to do something to take your account into the margin. The logic thing to do is to sell the stock but the actual price is lower than your long puts so you are going to loose more than yor maxim risk. Really I don't know if in this moment you decide to execute your long leg if IB will freeze your position until the close of the market or they oblige you to sell the stock at the market price. Please if you ask IB and get a response tell to the forum to know.
why would anyone assign (counterparty) long puts before expiration, the logical thing would be to sell them and get the time value ... if you by some miracle get assigned by the short puts you can always either sell the stock and in the meantime sell your long put (taking the extra time value) assigning long calls is a dfferent story but that will only happen at dividend time, you can calculate that
If you go way ITM on a long call (put), it's often cheaper to short (buy) the shares and exercise than to pay the spread if you cannot find liquidity. Or if you intend to take delivery of the shares anyway, it frequently isn't worth the .01 extrinsic value. Another big one is earnings plays with ATH trade. I actually do this one from time to time. If you short a clear peak (or buy before the dead cat bounce), you can lock in profit, frequently outside the range you'll see during next day's RTH. In this case it's almost always advantageous to just exercise rather than try to get a fill--you'll almost never get out of a shares+options position for the fair value immediately after an earnings release if the price from the previous ATH holds.
Hi Yes you are right, you can sell the stock and the long puts. What you have to see is how wide is the bid and ask in the first 10 minutes and if you will be able to sell the long puts with fair price. And that said i want to say that in my short time experience I have been early assigned a lot of times by my short puts, when they are ITM, every week, and only one time by my short calls, yes the day before ex-dividend. So for me it is not the exception to the rule but the rule. thanks.
The OP’s question is valid because of the retarded way IB margins vertical spreads. Even though his max risk is $50 IB marks to the bid/ask on the spread.