Margin requirement for a short calendar spread
Applies to margin accounts only
The margin requirement for a short calendar spread is the cost of the long option plus the margin required on the short option. There is no relief on calendar spreads when the short option expires after the long option.
Additionally, tastyworks does not recognize calendar spreads in cash-settled indexes. Any short option without a corresponding long option in the same expiration cycle will be treated as uncovered.
To learn how to set up a calendar spread in the tastyworks platform, please click here.
Example of a Calendar Spread in a Margin Account
XYZ is trading at $40:
Buy to open 2 Mar 43 XYZ Calls at $3.50db
Sell to open 2 Jun 43 XYZ Calls at $4.00cr
The margin requirement on the short call is: [(0.20 x 40) - 3 + 4] x 2 x 100 = $1,800
The margin requirement on the long call is the cost of the option x the number of contracts: $350 x 2 = $700
The margin requirement for the short calendar spread is $2,500 ([(0.20 x 40) - 3 + 4] + 3.50) x 2 x 100.