Need clarity on margins while going short option spreads

Alpaca Trading
1

Hi,

Consider the following scenario:

Current state::

cash 26649.22
buying_power 107420
initial_margin 0
last_maintenance_margin 1
maintenance_margin 0
non_marginable_buying_power 26649.22
options_buying_power 26649.22
portfolio_value 26650.22

Note that our portfolio only includes a 0.01 option and that explains the 1$ difference between portfolio value and cash.

Now, at this juncture, let us assume that we do the following trade:

Short call spread by going long NVDA250314C00113000 and short NVDA250314C00111000. Also assume that the execution of this trade results in a credit of $155. Since the net risk of this position is limited to $(113 - 111)*100 = $200, we expect a margin requirement of the same amount as well.

However after this trade, we have the following state:

cash 26804.13 ------ Increase of $155, which is expected.
buying_power 102959.76
initial_margin 200
last_maintenance_margin 1
maintenance_margin 200
non_marginable_buying_power 25664.67 – a decrease by $984.55,
options_buying_power 25664.67-- a decrease by $984.55,
portfolio_value 26635.13

Thus non margin buying power, as well as options_buying_power has decreased by unexplained huge amounts. I would have expected both of these to decrease by $200, since that the maximum risk associated with this portfolio. Can someone explain this non trivial decrease in the value of these metrics?

Thanks

2

I have confirmed that this issue happens even when we buy debit option spreads. Consider the following example:

Current state

<>
cash 26548.16
buying_power 107417.08
initial_margin 0
last_maintenance_margin 1
maintenance_margin 0
non_marginable_buying_power 26548.16
options_buying_power 26548.16
portfolio_value 26549.16
<>

Buy a debit option spread by going long NVDA250314C00111000 and short NVDA250314C00113000, incurring a net cost of $170. The resultant state is the following:

<>
cash 26378.06 ---- > decrease of $170, which is expected.
buying_power 103656.8
initial_margin 0
last_maintenance_margin 1
maintenance_margin 0
non_marginable_buying_power 25787.8 → decrease of $760.36, which is totally unexpected.

options_buying_power 25787.8
portfolio_value 26528.06

<>

Thus, the upshot of what we have seen is this: Even if our spread is a net debit one, if it involves a short option position, the non margin is decreasing by a very large amount. This behaviour looks erroneous and needs to be fixed. We do not see this behaviour when we go long a simple call/put.

Let me know if you need more clarifications.

Thanks

3

I am summarising all my issues/questions as a document here. Let me know if you need more information.

Comments margin computation Alpaca
Comments margin computation Alpaca612×792 108 KB

4

Does anyone have any thoughts on these? I would be delighted to provide any clarification whatsoever.