Options Margin Requirements: Spreads, Portfolio Margin, and Calls

Options margin requirements are set primarily by FINRA Rule 4210, with the Federal Reserve’s Regulation T establishing the initial credit framework. How much you need depends on the strategy: 100% of premium for long calls and puts, a percentage-of-underlying formula for naked shorts, the net debit paid for debit spreads, and the strike-width minus credit received for credit spreads. Every U.S. brokerage must meet these minimums, and most add stricter “house” requirements on top. A firm can raise its own margin on a given security overnight without warning you first.¹

Two numbers matter for any position you hold. Initial margin is what you deposit to open the trade. Maintenance margin is the equity floor your account must stay above afterward. Drop below it and the broker issues a call; fail to meet the call and the broker can liquidate positions to close the gap.

Buying Calls and Puts

When you buy a call or put with nine months or less until expiration, you pay 100% of the premium upfront. The most you can lose is what you paid, so no additional collateral is required. This is why long options feel like a cash transaction even inside a margin account.

Longer-dated contracts get a small break. If a listed option has more than nine months remaining to expiration (LEAPS), FINRA allows brokers to margin it at 75% of the option’s current market value.¹ OTC options with more than nine months to expiration follow a separate formula tied to the in-the-money amount and must be guaranteed by the carrying broker-dealer with American-style exercise to qualify.

You don’t strictly need a margin account to buy options, but a cash account limits you to long options, covered calls (you own the shares), and cash-secured puts (you hold enough cash to cover assignment at the strike). Any uncovered short or multi-leg spread requires margin approval.

Selling Naked Calls and Puts

Uncovered short options carry theoretically unlimited risk on calls and substantial risk on puts, so the requirement is heavier. For naked options on individual equities, FINRA takes the greater of two calculations:

Standard formula: 100% of the option premium, plus 20% of the underlying stock’s market value, minus the amount the option is out of the money.
Minimum floor: 100% of the premium, plus 10% of the underlying’s market value.

The floor keeps the requirement from collapsing on deep out-of-the-money contracts, which can still produce heavy losses on a gap.¹

A worked example: a stock trades at $100 and you sell a naked $105 call for a $3 premium. The standard formula: $300 premium + $2,000 (20% of $10,000) − $500 out-of-the-money = $1,800. The floor: $300 + $1,000 (10% of $10,000) = $1,300. You’d post the greater of the two, $1,800.

Index Options Adjustments

Broad-based index options (S&P 500, Russell 2000, and similar) use 15% of the index value instead of 20%, reflecting the diversification inside a broad index. The 10% minimum floor still applies. Industry-group (narrow-based) index options follow the same 20% standard as individual equities.¹

Short Straddles and Strangles

When you sell a put and a call on the same underlying, the two legs aren’t added together. FINRA requires the margin on whichever leg is greater under the naked formula above, plus the current market value of the other option.¹ The stock can only move one direction at a time, so only one side can produce a loss at any moment. The smaller side’s market value still counts as a liability because you’d need to buy it back to close.

Vertical Spreads

Debit Spreads

A debit spread (buy one option, sell another at a different strike with the same expiration, net cost to you) requires you to pay the net debit in full. The long leg caps your maximum loss at that amount, so no additional margin applies. Pay $2.50 net on a call spread and your requirement is $250 per contract.

Credit Spreads

A credit spread collects a net premium while the long leg limits your risk. The margin requirement equals the difference between the strike prices, minus the net premium received. For a $50/$55 spread where you receive $1.00 in net credit, the requirement is ($5.00 − $1.00) × 100 = $400 per contract.¹ That’s far less capital than selling the short leg naked, because the long option mathematically caps the broker’s exposure.

Portfolio Margin

Portfolio margin replaces the fixed-percentage formulas with a risk-based model that evaluates your whole account as a unit. It uses the OCC’s Theoretical Intermarket Margining System (TIMS) to simulate how your combined positions would perform across market stress scenarios, and the requirement equals the worst-case loss.²

The size of the simulated price move depends on the underlying. FINRA Rule 4210 specifies three tiers:

High-capitalization, broad-based indexes: +6% / −8% (asymmetric, because crashes tend to be sharper than rallies).
Non-high-capitalization, broad-based indexes: ±10%.
Individual equities and narrow-based indexes: ±15%.

A diversified book hedged with broad index options typically faces much lower margin than the same notional exposure in single-name options.¹

Portfolio margin isn’t open to everyone. Most brokerages want at least $100,000 to $150,000 in account equity, and you’ll usually need to pass a knowledge assessment. Traders in unlisted derivatives face a much higher FINRA bar of $5 million in minimum equity.¹ Concentrated positions get special treatment: when one holding drives most of your account risk, firms widen the stress range beyond the standard percentages, which can sharply raise the requirement on that position.

Margin Calls and Liquidation

Regulation T gives you until T+3 to deposit initial margin for a new position.³ After a position is open, the maintenance timelines depend on account type:

Standard margin accounts: any deficiency must be met “as promptly as possible and in any event within 15 business days.”¹
Portfolio margin accounts: three business days to deposit funds, add securities, or hedge; after that the broker must liquidate enough to bring margin below account equity.¹

Those are ceilings under FINRA rules. Most brokerages set shorter deadlines through house policy, and many reserve the right to liquidate immediately without issuing a formal call. In a fast-moving market, the risk desk isn’t waiting for the 15-day clock.

The 2026 Change for Active Intraday Traders

For years, anyone who executed four or more day trades within five business days (representing more than 6% of total trades in a margin account) was flagged as a pattern day trader and required to keep at least $25,000 in equity at all times. That framework is being retired. FINRA Regulatory Notice 26-10, effective June 4, 2026, eliminates both the pattern day trader designation and the $25,000 minimum equity requirement, replacing them with new intraday margin standards.⁴

Under the new framework, brokers calculate an “intraday margin deficit” for each margin account on any day that includes a transaction reducing the account’s intraday margin level. The rules shift from a trade headcount to a real-time risk assessment. Firms have until October 20, 2027, to fully phase in the new standards if they need extra implementation time. Whether smaller accounts actually gain more freedom to trade options intraday will depend on how each brokerage implements the calculation, since house requirements can always be stricter than the FINRA minimum.

1
FINRA. 4210. Margin Requirements
2
The Options Clearing Corporation. Customer Portfolio Margin
3
FINRA. Understanding Settlement Cycles: What Does T+1 Mean for You?
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FINRA. Regulatory Notice 26-10: FINRA Adopts New Intraday Margin Standards to Replace the Day Trading Margin Requirements