tastytrade developed a set of rules regarding capital allocation in margin accounts. Today, we found a way to apply the same rules to IRAs with one key adjustment.

When utilizing undefined risk strategies in IRAs, simply buy the 5 delta option to accompany the short option position. This will make your average buying power required for that trade roughly the same as a margin account while keeping the risk/return profile of the overall position the same. The capital allocation rules we have for margin accounts will now apply to IRAs as well.