The "daily Call" From Option Alpha: Options Trading | Stock Options | Stock Trading | Trading Online

Hey everyone. This is Kirk here again from Option Alpha and welcome back to the daily call. Today, we’re going to be answering the question, “Is margin required when trading option spreads?” The simple answer to this is yes and no. When it's typically thought about margin when it comes to investing, people think about borrowing on margin and then buying stock. But when it comes to options trading, you do have to have margin or put up margin to trade option spreads. Now, that doesn't necessarily mean you need a margin account. In fact, you can trade options spreads in your IRA or retirement account with your broker just as easily as you can trade option spreads in a regular margin account. Now, what brokers do is that when you’re trading spreads, they put up or set aside money in your account to cover the risk in that spread position. Let’s say you’re trading a $1 wide spread credit spread, either call spread or put spread and you take in a $30 credit which means you have about $70 of risk in a very simple spr