Does any Broker get Option Backspreads Margin Right?

[darp]

My biggest frustration is that I find option backspreads that have only $100 risk, positive theta maybe $300 possible upside AND place them.

Then get hit with $800 of margin loss.

Have IB, Fidelity and Optionshouse accts. Sometimes they get it right, but 80% of time charge me many many times the maximum risk worst case.

Any broker get it right? BTW I have talked with each of them about this. It cuts my return on capital to 1/5th or so.

 

[Robert Morse]

Please provide a specific example. Are you just short a verticals with the same month?

 

[darp]

Robert, funny Lightspeed asks, one have not tried, and wondered about. You could have huge competitive advantage if Lightspeed did calculate correct margin. Been telling other brokers same thing.

Simple backspread diagonal 2 leg. As in buy 10 29Puts Feb 15th, sell 4 30Puts Jan 15, with stock at 33. Thanks for asking.

 

[darp]

I talked with Bob, he was very helpful and will run teh trade for margin tomorrow. He explained it was software outside the brokers that determines margin and that (my account IRA) portfolio margin accounts will get close to correct margin.

 

[spindr0]

I've experience the same thing with IB. Their "Complex Order Margin" numbers make no sense at all. I'm never at the point where that excess reduction in margin affects my trading so it's no more than a roll of the eyes and wondering WTH?

 

[tfp]

Have you checked with Thinkorswim?

 

[darp]

Thanks Spindr, and tfp no. By chance do you know if they can get correct margin on backspread?

 

[lotfyisis]

@darp

I just came across a post you had in 2006 enquiring about ratio calendar backspread. Did you try it ? what is your experience so far?

 

[darp]

Hi Lotfyisis, sorry for very late replay. Sorta. Right now I do 4x3s short term and it tends to work. Like buy 4 QQQ Sept 14 ATM Call, sell 3 Sept 7 same, it gets theta and wins even and up. Straight Calendars have lower win rate% than above ratio as only wins evenish.