You sell one put and the account's available buying power drops by an amount that matches neither the premium you collected nor anything obvious on the screen. Then it changes again the next day without you trading.

Both behaviours are normal, and both follow from a formula worth understanding — because buying power is what determines how many positions you can actually hold.

In a cash account, it is simple

A cash-secured put requires the full assignment cost to be set aside.

Sell a $95 put for $250 and $9,250 is held. That money is untouchable until the position closes or expires. Predictable, unchanging, and expensive in the sense that it does nothing else while it sits there.

A covered call requires no cash at all — the shares are the collateral, and they are locked instead.

In a margin account, it moves

Margin brokers compute the requirement from a formula that takes the greater of two calculations, then applies a floor.

Work it through on a $100 stock with a $95 put sold for $2.50. Method A gives roughly 20% of $10,000 ($2,000), minus the $500 the put is out of the money, plus $250 — about $1,750. Method B gives $950 plus $250, about $1,200. The requirement is the larger: roughly $1,750, against $9,250 in a cash account.

That is five times the leverage, which is the appeal and the entire problem — see cash versus margin.

Why it changes without you trading

Notice that Method A depends on the current stock price and on how far out of the money the option is. Both move continuously, so the requirement moves with them.

As the stock falls toward your strike, the out-of-the-money offset shrinks and the requirement grows. A position that consumed $1,750 when you opened it can consume $3,000 after a 5% decline — at exactly the moment the position is also showing a loss.

Portfolio margin

Large accounts may qualify for portfolio margin, which computes requirements from a risk-model stress test of the whole book rather than position by position. Requirements are typically much lower, and genuinely hedged positions are recognised as hedged.

The trade-off is that requirements become less predictable and can change substantially as volatility rises. Lower normally, and higher precisely during stress.

Defined-risk positions are cheaper for a reason

A vertical spread's requirement is simply its maximum loss: the width of the strikes, less the credit. A $5-wide spread opened for $150 requires $350.

That is not a discount — it is the actual worst case, and the long leg makes it enforceable. This is why spreads are the practical route to premium selling in a smaller account.

Practical habits

Check the requirement before sending the order. Most platforms display the buying power effect on the ticket.

Track utilisation, not just position count. Three positions can consume more buying power than six, depending on strikes.

Stress test at minus 10%. Ask what the requirement becomes if the underlying falls that far. If the answer exceeds your available buying power, the position is too large today.

What can go wrong

Assuming the requirement is fixed. On margin it moves with price and volatility.

Sizing to full utilisation. It removes the room needed to survive a normal decline.

Confusing collateral with risk. A margin requirement of $1,750 does not mean the risk is $1,750 — assignment still costs the full strike.

Forgetting the requirement rises before assignment does. The squeeze arrives first.