Trivial question about naked options

Discussion in 'Options' started by luckyputanski, Apr 10, 2013.

  1. I sell call 110 and buy call 150, same expiry. Is call 110 naked for margin purposes? Also, would I be able to do this with acc below 100k at IB?
  2. It's a credit spread you're thinking of. The short option is covered by the long option.

    The margin would be (150-110 - credit) * 100 = $4000 - credit. The margin is generally your max risk.

    As long as you have at least $4000 you can open the trade.
  3. As Steve suggests; and I'll only add that you can probably buy protection a bit closer very cheaply (in $).
  4. Thanks. I wasn't sure if "covered" means "covered from the outset".
  5. As long as the trade is put on as a spread on one ticket you're covered from the outset.
  6. My recommendation is don't leg in or out. Always put the legs on at once ... And pull them off at once... Save yourself a lot of heart can cross that bridge when you get there if it makes sense to.. The margin requirement is always (not "generally) the difference between the short and long strike times the multipler for credit spreads....