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SPAN Margin For Spreads?
Question By Robert

SPAN Margin For Spreads?

Is Span Margin used by Options brokers for spread trades?

Asked on 26 January 2009

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Answered by Mr. OppiE

Hi Robert,

SPAN Margin, or Standardized Portfolio Analysis of Risk Margin, is an advanced system for determination of margin requirements for options writing. Options writing happens when you short options using the Sell To Open order.

Currently, SPAN Margin is only used in futures options or options on futures, not equity/stock and index options. Yes, SPAN margin would be used in spreads as well if you are trading options on futures. If you are trading the regular options on stocks or index, then the regular fixed rule options margin would apply, which varies according to broker.

In conclusion, SPAN Margin does apply to spreads but only when you are trading futures options or options on futures. To learn all about options margin and how it differs from stocks, futures and SPAN margin, please refer to our Options Margin tutorial.

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