Hello, I have a trade that look like this: buy 1 call contract, strike 210, price 1.99 sell 2 call contract, strike 225, price 0.57 buy 2 call contract, strike 240, price 0.19 Now I try to calculate margin requirement for this trade and have come up with 2 different calculation. As seen, I break down the trade i 2 different ways and come up with 2 different margin requirments. It seems that both approaches are correct but gives a big difference in margin requirements. I wonder which one is correct, I might be missing something? Thank you! --------------------------------------------------------------- Margin calculation 1 --------------------------------------------------------------- buy 1 call contract, strike 210, price 1.99 sell 1 call contract, strike 225, price 0.57 $142.00 sell 1 call contract, strike 225, price 0.57 buy 1 call contract, strike 240, price 0.19 $1,462.00 buy 1 call contract, strike 240, price 0.19 $19 = $1623 (Margin required) --------------------------------------------------------------- Margin calculation 2 --------------------------------------------------------------- sell 2 call contract, strike 225, price 0.57 buy 2 call contract, strike 240, price 0.19 $2,924.00 buy 1 call contract, strike 210, price 1.99 $199 = $3123 (Margin required)
Margin calculation 2 is correct. Optimize by pairing off spreads 1st then use the leftover. That does not mean your clearing firm will do that every time.