Cash proceeds from option writing

[Robert Morse]

I would be interested to see that email. I have been around the block and have never seen a short stock position offset a long stock position when it comes to the balances and how interest is charged and given.

Finally got an answer back from Wedbush, which was that proceeds from shorts are fully equal to real cash. e.g. can earn interest at the same rate as cash, or be used to finance long positions. Interesting that this is different from what @Robert Morse said earlier even though I thought Wedbush was Lightspeed's clearing broker. I guess these details can depend on the specific deal that you have with your clearing broker.

 

[cruisecontrol]

I would be interested to see that email. I have been around the block and have never seen a short stock position offset a long stock position when it comes to the balances and how interest is charged and given.

You misunderstood. Proceeds from short options, not short stock. I should have included that context I guess, but it's the whole topic of this thread.

The difference with what you said previously was only regarding interest payments on credits.

 

[cruisecontrol]

But what about the margins utilised by the short position?

I don't know what you mean. What about them?

 

[traider]

I don't know what you mean. What about them?

Won't the margins outweigh the short option position so much that the net interest is -ve

 

[cruisecontrol]

Won't the margins outweigh the short option position so much that the net interest is -ve

no. short positions don't generate margin interest charges...

 

[cruisecontrol]

Months later, finally got an answer from IB. I had forgotten the ticket was still open. They said that settled cash from option writing is equivalent to regular cash, basically the same answer I got from Wedbush.