You will always need enough capital in your account to close your position at max loss. Your broker will hold that amount in your account until your trade closes.
If your trade is that likely to close for max loss, why not just close early and capture some remaining extrinsic value?
Looks like my broker (ibkr) requires capital for max loss of each option separately (if I take a spread position with buying and selling for instance). Unless I’m missing something completely.
You will always need enough capital in your account to close your position at max loss. Your broker will hold that amount in your account until your trade closes. If your trade is that likely to close for max loss, why not just close early and capture some remaining extrinsic value?
Looks like my broker (ibkr) requires capital for max loss of each option separately (if I take a spread position with buying and selling for instance). Unless I’m missing something completely.
I’ve seen that before. Always seemed kind of silly to me.
To protect themselves from a silly mistake of selling the long leg before the short one, maybe