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What Is a “Spread” in Options Trading and How Does It Affect Margin?

A spread is a simultaneous long and short option position that lowers margin requirements due to its defined, reduced risk profile.
Greeks.Live23.11.25

What Is a “Spread” in Options Trading and How Does It Affect Margin?

A spread in options trading is the simultaneous buying and selling of two or more options of the same class on the same underlying asset, but with different strike prices or expiration dates. Spreads are considered risk-reducing strategies, as the short leg is partially covered by the long leg.

This defined risk profile significantly lowers the margin requirement compared to naked option selling.

Can You Combine Options to Create a Strategy with a Risk Profile Similar to Short Selling?
How Is a Synthetic Short Asset Position Created Using Options?
Why Might a Short Option Position Require a Higher Margin than a Long Option Position?
How Does the Concept of ‘Time Decay’ (Theta) Affect Margin Requirements for a Short Option Position?

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