Options Glossary
Reg T, short for Regulation T, is a Federal Reserve Board rule that sets the standard minimum margin requirement for buying securities on credit at a US brokerage. It's the baseline nearly every broker's own margin rules are built on top of.
Regulation T requires an investor to put up at least 50% of a security's purchase price in cash or eligible collateral, with the broker allowed to lend the rest. That 50% initial margin requirement means a margin account can control up to twice as much stock as the cash actually deposited. Reg T also sets the standard formula brokers use to calculate margin on many options positions, including defined-risk spreads and uncovered options, though individual brokers are free to require more than the Reg T minimum through their own house rules.
Reg T's 50% requirement applies to positions held overnight. Brokers commonly offer more buying power during the trading day itself, often up to 4 times equity for day trading, as a separate convention layered on top of the Reg T baseline. By the market close, though, positions generally need to fit back within the standard Reg T overnight limit or the account can face a day-trading buying power call.
For a defined-risk vertical spread, the standard Reg T margin requirement is simply the width between the strikes minus the credit received, multiplied by 100 shares per contract, since the maximum possible loss is already capped by the spread itself. For undefined-risk positions like a short strangle, Reg T uses a separate uncovered-option formula, typically the greater of a percentage of the stock price or a percentage of the strike price, plus the premium collected, applied per leg.
Reg T is the reason a $10,000 account with margin approval isn't limited to $10,000 of buying power, and it's also the reason a broker can issue a margin call the moment a position's value drops enough that the 50% cushion is no longer maintained. Every calculator on this site that estimates margin or overnight buying power is applying some version of the Reg T baseline, then noting that a specific broker's actual house requirement can be stricter.