How much collateral does an options trade tie up?
What sets a margin requirement?
A margin requirement is the collateral a broker demands for positions that can lose more than was paid for them. The amount follows regulation, product and account type, and it can be raised mid-trade when volatility rises. If the account cannot cover it, the broker is entitled to close positions itself.
Defined risk: the spread sets the figure
For a vertical credit spread on US-listed options under strategy-based margin, the requirement is the strike width times the contract multiplier, and the credit you received is applied against it. What stays tied up is width minus credit, times 100 — exactly the maximum loss the credit spread calculator returns. A debit spread is simply paid for in full, and that debit is again its maximum loss. That equality is why defined-risk positions are easy to size: the collateral and the worst case are the same number.
Naked: a formula, not the worst case
A naked short option has no long leg to cap the loss, so the rules use a formula. For a short put on a stock under the Cboe strategy-based rules, it is the larger of two figures: the premium plus 20 % of the underlying value minus the out-of-the-money amount, or the premium plus 10 % of the strike value. The requirement moves with the share price every day, and it sits far below the loss if the stock fell to zero.
Scope and the binding figure
These rules describe strategy-based margin for US-listed options. Portfolio margin, the risk-based margin used at Eurex and each broker’s own house rules can produce a different number, usually by stressing the position across price and volatility scenarios. Brokers can also raise a requirement during a trade when volatility rises. Whatever this page or a calculator shows, the figure your broker computes for your account is the binding one.
The common misreading
The margin requirement is often read as the risk of the trade. For a defined-risk spread it matches the maximum loss; for a naked position it does not. A short put with a 1,700 € requirement can lose several times that in a sharp fall, and a margin call can force you out at the worst moment. Treat the requirement as cash tied up, not as the most you can lose.
Worked example
Hypothetical numbers for illustration, not a market quote and not a recommendation.
An example stock trades at 100 €. Selling the 95 € put naked for 2.00 € requires, under the Cboe strategy-based rules, the larger of 200 + 20 % × 10,000 − 500 = 1,700 € and 200 + 10 % × 9,500 = 1,150 €, so 1,700 € per contract.
Selling the 95/90 € put spread for a 1.50 € credit instead requires the 5 € width × 100 = 500 €. With the 150 € credit applied, 350 € stays tied up, equal to the maximum loss of (5 − 1.50) × 100. Fees are ignored.
Strategies where the term matters
- Naked Short Put — Do you have the buying power to actually take delivery of the stock at the strike?
- Short Strangle — Why are you giving up the protective wings of an iron condor?
- Covered Call — Are you willing to hand over the shares at the call strike - even if they keep running afterwards?
Calculators for this term
Track it in your journal
Related terms
Every term in one place: the options glossary.
This material is general information about option strategies, written for a general audience. It is not investment advice, not a recommendation, and not financial analysis. Options can lose their entire value, and uncovered positions can lose more than the amount committed. Anything said about tax is general in nature and is no substitute for professional tax advice. Last reviewed: 2026-08-06.