Dual Edge Research publishes two powerful newsletters that work great individually — and even better together. The Bull Strangle Newsletter focuses on stocks and options, combining stock ownership with premium-selling strategies to generate consistent income and market-beating returns. The Smart Spreads Newsletter specializes in seasonal commodity futures spreads, offering a diversified approach with low correlation to equities. Together, they deliver a complete investment perspective — one focused on income, the other on diversification — all under one simple subscription.
Introduction
Option-selling strategies are widely misunderstood—especially when it comes to margin. While covered calls and cash-secured puts are two of the most conservative ways to generate income, they can still create confusion for traders who don’t fully understand how margin is calculated, how it’s used, and how to manage it responsibly inside a real portfolio.
When both strategies are combined—selling a call against owned stock and selling a cash-secured put on the same underlying—the result is a powerful structure that produces equity-like returns with far steadier income. But the key to making this approach sustainable is simple:
Margin management must be intentional, disciplined, and conservative.
Below, we’ll break down how margin works in this dual-sell framework, why different brokers calculate it differently, and how to manage capital efficiently while avoiding the risks that derail many traders.
Understanding Margin in a Stock + Dual Option Structure
The strategy involves three components:
- Long Stock
- Short Out-of-the-Money Call (Covered Call)
- Short Out-of-the-Money Put (Cash-Secured Put)
The long stock fully covers the call. The cash reserve fully covers the put.
At first glance, this appears straightforward—but margin calculations vary widely among brokerage firms, and each position affects your “available to trade” capital differently.
Why margin varies from broker to broker
Brokers use different risk models (Reg-T, portfolio margin, house overlays). As a result, two brokers may show drastically different requirements for the exact same position. And while the calculations can get complicated, the practical takeaway is simple:
If you’re not borrowing against your account, margin math matters far less than your cash management discipline.
Which leads to the most important guideline in this type of strategy…
The 25% Excess Cash Rule
In a disciplined premium-selling system, the trader always maintains at least 25% of total account value in unused cash.
This accomplishes three things:
1. Prevents the unintended use of borrowed margin - Traders never wake up to a margin call or forced liquidation during a volatility spike.
2. Keeps position sizing consistent - Because capital is never over-allocated, the account can withstand losing trades—rare but unavoidable in any option-selling system.
3. Allows the trader to hold assigned stock comfortably - When a cash-secured put is assigned, the trader has the dry powder to take on shares without panic or forced adjustments. Maintaining this buffer turns margin into a non-factor, even when brokers calculate requirements differently.
Given the inconsistencies in broker margin formulas, the most reliable capital management tool is one every platform provides:
Cash Available Without Margin Impact
This value tells you exactly how much capital remains that is not tied to margin or borrowing capacity. This metric matters far more than any formula the broker uses behind the scenes.
For example, consider a trader who:
- Owns 100 shares of a $75 stock
- Sells a covered call and a cash-secured put
- Collects $4.50 in total premium
The account’s true capital usage is determined by the cost of the shares minus the premium received—not by the broker’s internal risk model.
The Hidden Risk of Margin: Emotional Misuse
Many traders never blow up because of bad math—they blow up because of bad behavior. The most dangerous margin mistake in option selling is using leverage to increase position size after wins or to “fix” losses.
In the dual-sell structure:
- You never roll to avoid losses
- You never double up after a bad week
- You never increase size because a stock “looks cheap”
- You never borrow against your positions
The discipline is the edge. Margin exists behind the scenes, but it is never used as a tool for leverage. It exists only because broker platforms must calculate it—not because the trader should.
Conclusion: Margin Should Support the Strategy—Not Drive It
Stock-plus-dual-option selling is one of the most conservative income strategies available. But its strength depends entirely on disciplined margin management.
When traders:
- keep sizing consistent,
- use cash-secured entries,
- avoid leverage, and
- maintain a 25% cash buffer,
margin becomes a background detail rather than a source of risk. Used properly, this structure delivers steady weekly income and long-term consistency—without ever relying on leverage or complex adjustments. And in a market where many traders chase high returns through excessive risk, disciplined margin management is not just a safety feature. It is the strategy’s superpower.
More Information
Now you can get two powerful newsletters — for one simple price!
- For stocks and options, the Bull Strangle Newsletter shows you how to combine stock ownership with dual option selling — a disciplined strategy that has consistently outperformed the S&P 500.
- For commodity futures, the Smart Spreads Newsletter focuses on seasonal commodity spreads — a proven, low-correlation approach that thrives in all types of markets.
Each newsletter is designed to deliver consistent income on its own — but when used together, they create a complete, diversified trading approach that works in any market environment.
Visit BullStrangle.com to subscribe for just $1 for the first month.
For a video overview of the Bull Strangle Newsletter
For a video overview of the Smart Spreads Newsletter
Darren Carlat
Dual Edge Research
(214) 636-3133
DualEdgeResearch@gamil.com
Disclaimer
This information is for informational purposes only and should not be considered as investment advice. Past performance is not indicative of future results, and all investments carry inherent risk. Consult with a financial advisor before making any investment decisions.
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