Unmargined Spread

An option spread in which the short option leg is margined separately as a naked option. Investors choose this setting for many reasons, including specifically the cases where one or both of the options, making up the spread, are traded over-the-counter (i.e., unlisted), or where the expiration date of the long option is nearer than that of the short option, or where naked options provide more favorable margin requirements than regular vertical or diagonal spreads.