Futures Margin question?

[Trend Fader]

Assuming u have 100k in an IB universal account. And you are fully invested in the market.

Now lets say u want to trade the ES however u have $0 in liquidity because u are fully invested. Can u still trade the ES because u have $100k net worth in your account although its not liquid?


--MIKE

 

[gnome]

Quote from Trend Fader:

Assuming u have 100k in an IB universal account. And you are fully invested in the market.

Now lets say u want to trade the ES however u have $0 in liquidity because u are fully invested. Can u still trade the ES because u have $100k net worth in your account although its not liquid?


--MIKE

Exchange regulations notwithstanding, it may be up to the broker. The "usual" acceptable deposit against a futures contract margin is either cash or T-Bill on deposit with the Broker.

 

[Trend Fader]

Quote from gnome:

Exchange regulations notwithstanding, it may be up to the broker. The "usual" acceptable deposit against a futures contract margin is either cash or T-Bill on deposit with the Broker.

I guess that means no I cant trade the ES in that account.

Anyone know IB's policy?

 

[Zmey]

Futures margin can be covered by cash or net option value. Stock positions cannot be used for this purpose.

 

[OldTrader]

Quote from Trend Fader:

Assuming u have 100k in an IB universal account. And you are fully invested in the market.

Now lets say u want to trade the ES however u have $0 in liquidity because u are fully invested. Can u still trade the ES because u have $100k net worth in your account although its not liquid?


--MIKE

I found myself somewhat puzzled by your terminology. It was not clear if "fully invested" meant that you owned $100K in stock which was fully paid for, or whether you had $100K in the account with which you bought $200K in stock, fully margining this purchase.

If you are fully margined ($200K in stock bought with $100K), there is no withdrawable funds, which is what you need to move funds to the futures side of the Universal account.

If you have fully paid for $100K in stock but not used margin then you have up to $50K in withdrawable funds.

Once the stocks begin to move they may well generate excess funds which could be transferred to the futures side of the account.

OldTrader
Not an expert margin clerk.

 

[def]

oldtimer is correct for after hours. during the trading day you'll have 4:1 margin on the equity portfolio and thus funds would be available for futures trading. HOWEVER, if you are truly fully margined (2:1) and suffer any future losses, you would be in a defict situation when margin reverts back from 4:1 at the end of the day. At this point you'd be subject to a partial liquidation to cover the deficit.

 

[Trend Fader]

ok thanks

 

[OldTrader]

Quote from def:

HOWEVER, if you are truly fully margined (2:1) and suffer any future losses, you would be in a defict situation when margin reverts back from 4:1 at the end of the day. At this point you'd be subject to a partial liquidation to cover the deficit.

Def:

One question: In your assumption after a day trade loss on the 2:1 account, while you are obviously now under 2:1 margin, you would still be above maintenance margin for that position. So to clarify, even in this situation one would be required to restore to a full 2:1 margin?

OldTrader

 

[def]

yes you are correct. you would only be liquidated if you are below maintenance. if you are above maintenance but below the initial margin requirement you wouldn't have any free cash to put on additional trades.

 

[alanm]

Perhaps I'm misunderstanding, but it seems that only settled cash, and not any excess liquidity above maintenance of stock positions, can be used for performance bond for new futures positions.

I have the following situation in one of my accounts:

Net Liq Val = 8988.79
Securities GPV = 1750.00
Total Cash/Settled Cash = 7238.79
Available funds = 8113.79

In other words, I've got 7238.79 in cash, and a stock position that has $875 (50%) in margin value available.

TWS will not let me purchase 2 ES contracts, though, which have an $8K initial performance bond requirement. It says:

"...your net liq in USD denominated assets [7233.99] must exceed the margin req [8000] for those assets."

In other words, it is saying that the margin loan available from a stock position does not qualify for use as performance bond for futures. This seems wrong, since I could theoretically transfer 8113.79 to another account and use it there.

Is this a bug or an inconsistent policy?