What Are the Margin Requirements for a Synthetic Short Stock Position?

The margin requirement for a synthetic short stock position (long put, short call) is determined primarily by the short call option component. Because a short call has unlimited risk, it must be collateralized.

The margin is typically calculated based on a formula that considers the underlying stock price, the option's strike price, and the premium received. It is often similar to the margin required for a naked call or a traditional short sale of the stock.

The long put can sometimes reduce the overall margin requirement slightly, but it remains a capital-intensive strategy.