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borgia

Credit Spread at Expiration what happens

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I have a TD ameritrade account and I ran the following trade:

 purchase a 7-31 FB put w a strike of 222.5 and sold a 7-31 237.50.

Right now FB is trading at roughly 234.

If it stays consistent and my options expire with the price at 234 the protective put I purchased would expire useless but the 237.50 would be exercised?  This would mean that I would need $23750 in my account or would TD just immediately sell the stock and apply it to the balance? Can someone tell me what happens when the stock price is within the spread at expiration?

I'm a little confused because TD let me do this trade without all the funds in my account I presumed because the max loss was $1500.  However I guess the 222.5 put could expire useless and the 237.5 could be exercised but me not have the $ in my account, however this doesn't make sense from their perspective.  In other words I'm guessing they have thought about this and planned for it.

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Any credit spread has maximum loss of the strikes width. Theoretically the short options can be assigned at any time, and if you don't have enough funds, you will get a margin call and will need to sell the shares. This is pretty standard.

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