When you do a vertical spread the brokerage keeps margin to cover all of the potential risk. At expiration a loosing position trades stock with a value substantially in excess of the margin. Do you actually need to have funds in the account for that trade? Are there any brokerages that would let me invest 90% of my account if I wanted to and not have reserves to perform that expiration trade? What happens if I do that and loose? Do I get a phone call asking for more money? Has anyone tried it, on purpose or by accident?
Hmm to my understand, the margin requirement (max loss) for vertical credit spreads is the difference between the short strike and the long strike. If you end up nearing expiration and your short strike is in the money, and your broker sees that you are at risk of being assigned a huge amount of shares and no money to cover it, the margin team will usually close your position for you before end of day on expiration day. If they don't you could end up with a huge debit balance. don't let yourself get assigned!! Cut your losses and move on.
If you have options ITM at expiration and don;t want the stock position the next day or don't have funds for that, you should do the following before the options expire: Roll the position to another date (Close old, open new) Close the position If you do this, you can use 90% of your account toward reg-t margin if you comfortable with that risk. I also suggest you don't wait until 3:59 pm ET on expiration day. Some brokers will auto liquidate just the positions that will cause a call after expiration. They will do this at some random time on expiration day.