Example:
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Sell 1 Put at $100
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Buy 1 Put at $95
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Net Credit = $1.50
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Spread Width = $100 – $95 = $5
Margin requirement:
5×100=$500 per spread5 \times 100 = \$500 \text{ per spread}
Your maximum loss is:
$500−$150=$350\$500 - \$150 = \$350
The broker requires $500, even though the real risk is just $350, because they don’t subtract the credit from the margin requirement upfront—you just keep the credit as profit if it expires worthless.
