I am wondering why most online brokers restrict multi-legged options spread trades to have a maximum of four legs?
Also, is there a broker that allows you to trade say 6 or 8 legged option spreads.
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The issue is what exchanges recognize as acceptable complex option orders. This is governed by FINRA margin rules like rule 4210
Brokers can only execute orders that are recognized by options exchanges. So what brokers can put on a single order ticket is limited. The most complex spreads defined by FINRA rules would be butterfly spreads, box spreads and possibly condors.
Clearly you can build as complex options positions as you wish but you would have to leg in/out of those.
Multi-Leg options are just combinations of vanilla options. So you can combine two 4-leg spreads to an 8-leg spread and so on.
I think they offer at most 4 legs because it is the most bought option. I dont see a reasonable trading strategy involving 5 or more legs.
Interactive Brokers accepts orders with more than 4 legs (e.g., 6 or 8) as a single order.