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I certainly think there is some risk added to the overall system because of PM, albeit it is hard to tell how much. I had some back and forth with a professor who co-wrote a paper about this topic. He said that the regulators have basically dismissed his ideas though. Anyhoo, you can see...

Indeed cdcaveman, indeed. There is always the risk that your assumptions get the better of you. History has shown us that hubris is the enemy of all traders. We actually went through the exercise of examining a bunch of potential scenarios that were outside our risk framework. We tried to...

I would definitely opt for Portfolio Margin. That's just me however and this might not be the best choice for everyone, especially for novice traders that have yet to develop their risk management chops. My background is in building portfolio risk systems for large institutional investors so I'm...

You could be right and it would be a prudent decision on IB's part. If I was writing the specs for IBs Portfolio Margin system, I would certainly impose a substantial position concentration penalty. 30% seems well within the realm of reason. -Jason

At a 30% move, the average delta of the position is likely to end up closer to let's say 0.85 on average (bigger move means one of the options is more in the money). So, taking this into account, you end up with margin requirements as follows: Percent_Move * Share_Price * Quantity * Delta =...

Well, that may or may not be the case. I would need you to give me the exact details of the positions so I can run the numbers. But yes, if a position concentration penalty is at work here, then you would see a lower margin requirement if you split the same exposure across a greater number...

It's not inconceivable that this could happen and it really depends on your exact positions. If you post the details of your positions (i.e. strike, expiry, etc) I can work out the Portfolio Margin Calculation for you and repost the results. My guess here is that there is an IB position...

I see a lot of comments about what Portfolio Margin was "designed for". At the end of the day, the genesis of the regulations matters much less than what Portfolio Margin can actually be used for today - and leverage, options trading, and hedging are all legitimate applications. Using PM to...

Your calculations are correct, except that you forgot to add the $17,500 cost of the put options. Adding this back into the cost and using the margin rate you quoted, gives you yearly interest payments of $3524. This is an approximation (but a decent one) since, if I recall correctly, margin...