Option Spreads, Credit my Debit Message Board

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Strategies & Market Trends : Option Spreads, Credit my Debit

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To: dealmakr who wrote (756)	7/2/1999 10:32:00 AM
From: Jon Tara	Read Replies (2) of 2317

Question on OEX credit spread margins... I asked my broker (Preferred) for the margin policy on spreads. I was expecting a prepared e-mail or printed material. I was a bit disappointed to get this terse response: ------------------- Spreads require a minimum of $10,000.00 in equity plus the spread maintenance: The margin requirement on a spread done with options expiring the same month. On a debit or a credit spread the margin requirement is the most you can loose on the spread. On a debit spread for instance; If you buy a spread for $1.25 with options expiring in the same month the most you can loose is $1.25 x the number of times you do the spread, (that amount is the margin requirement). On credit spread using options from the same month; The most you can loose is difference between the strikes minus the credit you received from selling the spread. Again this is the maximum you can loose and is the margin requirement. ----------------- Basically, it sounds like on credit spreads I would have to put up the entire spread as margin. (Actually, the spread minus the credit). Is this typical? That is, for the trade you just posted, I would have to put up 9 points margin.

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