Margin requirement when trading a butterfly

Applies only to margin accounts

The margin requirement for a short butterfly is the margin required on the credit spread portion of the strategy (the difference between short and long strikes).

Example of selling a butterfly in a margin account

Sell to open 3 Mar 75 puts at $1.50
Buy to open 6 Mar 80 puts at $4.00
Sell to open 3 Mar 85 puts at $6.00

Since the credit spread portion of the strategy is $5 wide (-85/+80 strikes), the margin requirement for this position is $1,500 ($500 x 3 contracts).