Why are my funds locked up in my trading account while using bear put strategy?

Question

Today I used a bear put strategy and I was surprised to see that some funds in my trading account were locked up as margin used. It is well known that the potential loss in bear put strategy is limited. Why the lock up?

Bob Baerker · Answer

There are various types of 'bear put' strategies and some require margin while others don't.  I'm going to assume that you are utilizing a basic vertical spread.

If it's a debit spread, there is no margin requirement since the risk is what you pay for it.  If it's a credit spread then the margin requirement is the difference in strikes less the premium received.

Why are my funds locked up in my trading account while using bear put strategy?

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