Danger of IB? True or False?

[Option Trader]

Only about a week has gone by. In spite of all the assurances made, exactly what we were afraid of occurred by IB but with a different twist. Their auto-liquidate system tore down 230 box spreads midday, and not because of a maintenance issue, rather because of a change in the intraday net liquidation value (relative to the GPV). Many brokers don't even look at this factor at all. The auto-liquidate software is programmed to liquidate when there is a maintenance problem issue, and not overall position size problems. A small amount of money wired to IB today was easily enough to correct the problem, while 230 box spreads broken down did nothing or nearly nothing to correct the problem, only to cause an unnecessary loss.
IB wants the convenience to automate, but software cannot TOTALLY replace customer service. A broker is allowed to protect themselves, but not in a manner which leads to unnecessary damage. I am still waiting to see if IB takes responsibility.

 

[luh3417]

Does "set liquidate last" help protect box spreads?

Does IB's information box "Margin Requirements and Trading Limits" indicate that you are running close to the edge?

 

[WD40]

for 50 more cents per contract, you can talk to someone at TOS who knows options, spreads and portfolio management using greeks. and if you are not satisfied with the help desk, you can just ask for the boss, they will patch you to one of the owners of TOS, and he will personally sort out the problem for you. more often then not, he will even throw in his expert opinion on how you can manage your account better.

for some people, 50 cents means a 50~60 percent increase in commission. but you have to look at the big picture and decide for yourself -- what is more expensive? the commission? peace of mind? the opportunity cost?

 

[ktm]

Quote from Option Trader:

The auto-liquidate software is programmed to liquidate when there is a maintenance problem issue, and not overall position size problems.

Maybe I'm missing something, but doesn't:

position size X current price = current acct value

and

IF current account value < maintenance

then

start liquidating.

I would agree that it is probably time for you to switch brokers. IB just hasn't worked out for you. It's not for everyone.

 

[Option Trader]

Any company can have a problem; the way the problem(s) is resolved is the issue, and it will go far beyond my personal considerations.

 

[skeweddude]

Quote from WD40:

for 50 more cents per contract, you can talk to someone at TOS who knows options, spreads and portfolio management using greeks. and if you are not satisfied with the help desk, you can just ask for the boss, they will patch you to one of the owners of TOS, and he will personally sort out the problem for you. more often then not, he will even throw in his expert opinion on how you can manage your account better.

for some people, 50 cents means a 50~60 percent increase in commission. but you have to look at the big picture and decide for yourself -- what is more expensive? the commission? peace of mind? the opportunity cost?

TOS meaning thinkorswim correct? The cost per option is .75 at IB (min charge is a buck), and TOS is the lesser of $2.95 per contract OR
$1.50 per contract plus $9.95 (only one $9.95 charge for unlimited spread legs) . Just wondering why you are saying it's 50 cents more? I have a separate account I am planning to move to TOS in a little while. Please let me know when you get a sec.

Thanks, sd

OptionTrader - sorry for the misfortune, although I am not very familiar with box spreads and have little to offer in response, I hope it works out.

I had a system issue about a week ago and IB customer service was very responsive and impressive and I was very pleasantly surprised.

 

[WD40]

Quote from skeweddude:

TOS meaning thinkorswim correct? The cost per option is .75 at IB (min charge is a buck), and TOS is the lesser of $2.95 per contract OR
$1.50 per contract plus $9.95 (only one $9.95 charge for unlimited spread legs) . Just wondering why you are saying it's 50 cents more? I have a separate account I am planning to move to TOS in a little while. Please let me know when you get a sec.

if you trade in volume (i.e. avg ~1 trade a day), you can negotiate for better commission.

note: avg 1 trade a day, not 1 contract a day.

 

[skeweddude]

Quote from WD40:

if you trade in volume (i.e. avg ~1 trade a day), you can negotiate for better commission.

note: avg 1 trade a day, not 1 contract a day.

Very good to know and kind of what I thought you were implying. The platform is exceptional, so you are getting the best of both worlds there.

Thanks, sd