Buying power and cash securing basics

Buying power and cash securing refer to the capital a strategy requires and the funds that must be set aside to support assignment or maximum loss. They are central to this framework because capital fit is one of the main exclusion checks.

Buying power and cash securing basics describe how much capital a strategy uses and what resources must be available if the position moves against the trader or is assigned. In the article, this is one of the clearest selection filters. A covered call requires ownership of 100 shares per contract, while a cash-secured put requires enough cash to buy 100 shares at the strike if assigned. By contrast, a vertical spread requires only the net debit paid or, for a credit spread, the strike width minus the credit as maximum loss, which makes defined-risk spreads and iron condors more capital-efficient when risk must be capped in cash terms. The framework therefore uses buying power fit before entry to rule out strategies the account cannot realistically support.

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