There is no free lunch. Yes, the broker will hold or reduce some of your available margin in this case. If it is a cash covered put, they will lock up the cash to cover, if it is a margin account, they will lock a certain percentage of margin. The risk is still all yours and you would need to have sufficient assets to cover. The point is,
@Tyler34 did not actually pay money upfront with this strategy. He took a huge amount of risk - the broker can call your margin and liquidate assets to pay if things go bad.
This is riskier than just buying OTM calls - here the risk is limited to the premium paid. So, risk is capped to an upper limit - this is what I do all the time. With the synthetic long or split-strike synthetic long as
@Bet TSLA correctly pointed out, the risk is on both, the premium on the call and the risk of assignment on the put