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Unbelievable reply, So they are saying we may auto liquidate your vertical spread at a price substantially below 0. Never mind that it won't be worth less than 0 or if we enter the order as a spread, there will always be a buyer at even a small debit.

Well, VIX futures and options are not traded on the CME, unlike ES futures and options. ES options exercise into ES futures, VIX options are cash settled. They do not exercise into futures. They are not futures options. I wish someone from IB would come on and explain the original issue raised.

This response would be the most frustrating for me. The representative you spoke to had no interest in trying to understand the problem. This is a cash settled index, so there is absolutely no risk other than your initial debit.

Another thing to consider is TOS's rates are "all in". If you are trading single listed products like the SPX or VIX you will be hit with additional exchange fees from IB of around .40.

What product were the options on? Stock or index?

Monday, July 7th. http://www.marketwatch.com/story/cboe-plans-to-list-options-on-gopro-inc-gpro-2014-06-30

You may want to call the CBOE help desk, 1-866-728-2263. They may be able to give your more information.

You will find that your markets will be matched by the market makers. Generally the market makers will not allow a bid or offer of yours to stand alone if there is edge in it. Where you might have an edge are in products where you have priority over the market makers. For example the VIX...

The problem here is obtaining the spread at "good" price. You will generally have to give up edge to put the spread on and to take it off. Add to that the commissions on 4 legs, both on and off, makes it extremely difficult to make money over time.

I don't believe this is true. The current vol by itself has no bearing on whether this strategy makes money. It all depends on the PRICE you are paying for the spread, relative to the vol. For example if you bought a $5 iron condor for 4.90 in a high vol environment, would you be better off...

As others have mentioned you would be short 12,000 shares of SPY. At 195 that's $2,340,000 worth of stock and a plus $1,000,000 margin call. Being short the stock, you have a potential unlimited loss. Can you see why the brokerage firm didn't want to take this risk?

30% crazy? How about looking 50% down in the SPX for Apex accounts?

Its not what you made last year, its understanding your risk to the firm. You talk about the maximum risk of your spread, but that is NOT your maximum risk. As I mentioned in my previous post, there is a chance that your short calls could be assigned, something that you have NO control over...

Thanks for the correction!

Here is the problem the broker faces. If SPY had rallied over 195, your calls would have been assigned and you would have been long 12,000 shares. Even if it didn't rally that much before the close, if futures had rallied after the market closed, your spy calls might still be assigned, even...

Are you trading the calendars as spreads? If you are they should go directly into the COB (complex order book) with SPXW options. You should be filled between .05 and .10 of fair value. Many computers will constantly scan the COB. If you put a spread in the SPX, the brokerage house will...

Didn't realize this, thank you for the information.

The main reason is probably the midpoint is a better representation of fair value in the SPXW than the SPX. Both are single listed on the CBOE. The SPXW like all other options on the CBOE are traded on an electronic Hybrid System. Quotes are "streamed" in by many different market makers...

Actually for the average retail investor short puts are better than covered calls in any stock that is hard to borrow. You get the "value" of the hard to borrow being short puts. If you do covered calls, you are giving up this "value" and letting the broker get it by loaning out your long stock.

Funny you should mention this example. Trading SPX weeklys Friday. With the SPX at around 1880, all the puts expiring that day below 1840 were at .05, yet there were customers buying puts for a nickel all the way down to the 1690's. Yes they could have bought the 1840 puts, but they bought...