I am trying to sell a ODTE vertical credit spread and trying to understand the change in buying power. Please help me in understanding it correctly since it does not make any sense to me.
My understanding is that my max risk is $2 per share ( i.e. $200). The difference between the strike prices of the calls.
However, the change in buying power is significantly high and therefore I am not sure if I am taking the correct risk. Why does it say $8,955 in buying power change?
I also have roughly $14k cash in the account. Does that factor into this calculation in any way?
Thanks in advance!
Need help understanding change in buying power
byu/CheesecakeAsleep9891 inoptions
Posted by CheesecakeAsleep9891
2 Comments
Your broker is assessing the buying power for a naked call. Maybe it is because it is very close to expiration.
I see you have blacked out something and left Margin. They are treating this as a Cash Account. Perhaps you are with one of the many firms that has many different Option Levels and you do not have xxxx Option Level (that stuff is all BS and made up). If this bothers you go to a real broker like Tasty.