Higher margin requirement for naked calls vs call credit spread
I am looking into adding $Estee Lauder(EL)$ calls to form a strangle with my current puts.
I tried to use the vertical function but it only allows $5, whereas I am looking at $10 interval.
Nevertheless, I used custom to form the credit spread.
The margin requirement is usd $4000.
I tried comparing by using naked calls.
Naked calls actually requires lesser margin.
It could be a matter of tiger not being able to cope with Jade lizards (Naked puts pair with call credit spreads) in terms of the assessment of margin, that's what leads to this peculiar situation, whereby the position is safer but requires more margin.
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Hey Bonta, thank you for your professional advice. I have already provided feedback to the product team, and I will reply to you once there is a conclusion.
The margin requirement for naked calls is higher than the margin requirement for call credit spreads because naked calls have unlimited risk.
With a call credit spread, the seller is short a call option and long another call option with a higher strike price.
It is important to note that these are just the minimum margin requirements.
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