here's some excerpts from FINRA rule 2520: (M) Cash account transactions â A member may make option transactions in a customer's cash account, provided that: (i) The transaction is permissible under Regulation T, Section 220.8; or (ii) Spreads. A European-style cash-settled index stock group option or stock index warrant carried in a short position is deemed a covered position, and eligible for the cash account, provided a long position in a European-style cash-settled stock group index option, or stock index warrant having the same underlying component or index that is based on the same aggregate current underlying value, is held in or purchased for the account on the same day, provided that: a. the long position and the short position expire concurrently; b. the long position is paid is full; and c. there is held in the account at the time the positions are established, or received into the account promptly thereafter: and for these strategies and just about every other one imaginable: (iii) Long Butterfly Spreads, Short Butterfly Spreads, Long Condor Spreads, Short Iron Butterfly Spreads, or Short Iron Condor Spreads. Put or call options carried in a short position are deemed covered positions and eligible for the cash account provided that the account contains long positions of the same type which in conjunction with the short options, constitute a long butterfly spread, short butterfly spread, long condor spread, short iron butterfly spread, or short iron condor spread as defined in Rule 2522 and provided that: a. all component options are listed, or guaranteed by the carrying broker/dealer; b. all component options are European-style; c. all component options are cash settled; d. the long options are held in, or purchased for the account on the same day; e. all components options expire concurrently; f. with respect to a long butterfly spread or long condor spread as defined in Rule 2522, the net debit is paid in full; and g. with respect to a short butterfly spread, short iron butterfly spread or short iron condor spread as defined in Rule 2522, there is held in the account at the time the positions are established or received into the account promptly thereafter: 1. cash or cash equivalents of not less than the amount of the difference between the two lowest exercise prices with respect to short butterfly spreads comprised of call options or the difference between the two highest exercise prices with respect to short butterfly spreads comprised of put options, to which the net proceeds from the sale of short option components may be applied; or 2. an escrow agreement. The escrow agreement must certify that the bank holds for the account of the customer as security for the agreement i. cash, ii. cash equivalents or iii. a combination thereof having an aggregate market value at the time the positions are established of not less than the amount of the difference between the two lowest exercise prices with respect to short butterfly spreads comprised of calls or the difference between the two highest exercise prices with respect to short butterfly spreads comprised of puts and that the bank will promptly pay the member such amount in the event the account is assigned an exercise notice on the call (put) with the lowest (highest) exercise price.