I was hoping cdcaveman would reply.
There aren't many alternatives for pure options traders out there, at least not based on commissions.
Based on mentions here on ET: Thinkorswim (TDA) and Optionshouse come to mind.
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IB calendar spread margins on options (puts) for CLG16 and CLH16
- Thread starter B Johnson
- Start date
There aren't many alternatives for pure options traders out there, at least not based on commissions.
Based on mentions here on ET: Thinkorswim (TDA) and Optionshouse come to mind.
Yeah absolutely retarded way of running a margin system. IB seriously needs to get its act together and stop it with this nonsense. They obviously dislike something about options, counterparties, and the potential one couldn't close out the option I guess. The way they're handling things is irrational.
Also aren't FOP gains/losses marked to market anyway? Surely a gain on the long side is adding to account equity?
You're thinking of futures margin. Futures p/l is handled as a cash flow, not FOPs. FOPs are m to m but as unrealized p/l. FOPs use SPAN or a risk scenario based margin, whatever, with a "one day risk horizon." These differences sometimes cause the margin for FOPs to be greater than the margin for the UL.
IB also can and sometimes does mandate margins greater than the exchange rates.
OP, auto liquidation is a scary reality at IB. I don't like it, it would be nice if IB could find a better way. But it's part of the price you pay to do business there.defeats the whole purpose of calendar spreads and having low margins,
The spread has two different ULs so the long option does not cover the short. It's not a calendar spread per se, you're trading the futures spread as well.
The contango in 2008/2009 reached ridiculous proportions. Your spread could lose far more than the debit.
I found this page enlightening.
http://ibkb.interactivebrokers.com/node/990
Auto liquidate is notorious at IB
This is why I do not have an IB account. I always here these horrible stories about auto liquidation of positions. There is enough involved in Risk management when trading your account, the last thing I want to add is some totally random margin call even if you have more than enough margin. I do not like risks I cannot plan for.
I will stick to my TD and Etrade accounts, never had any issues with them.
They're shocked because most people don't think to search of "totally irrational liquidation" AND "Interactive Brokers" before opening an IB account. Or they didn't know ET existed until they opened an IB account, were the recipient of a totally irrational liquidation, and did a google search for it and stumbled onto ET.
For the OP, one trick I've learned when opening spread positions is to immediately enter a GTC order at the max value of the spread as soon as you open your position. For example, if it is a 5 point SPX spread, enter an order for that same spread at $0 or $+5.00 depending if you're doing a debit or credit spread respectively. The problem is their liquidation routine is not programmed to understand that you can't lose more than $5 on a 5 point SPX spread for example, so if the bid/ask spread goes wide and the best debit/credit is less than $0/greater than $5, their computer uses that as the current "value" of your position and you get liquidated. If you put in an order right at the min/max value of the spread, their computer sees that as the market value, since it's now the NBBO, and prevents the spurious liquidation. You'll probably never have to worry about getting a fill at that price (I have once), but if you do you're just out commission on the 1 share you put out there. Its ridiculous that you have to do this, but until you find a substitute broker it should work for you.
Its because of Elite trade why I chose never to open an IB account. Those stories are nightmares. there is no way to manage risk with an IB account since they add a big counter-party risk that you cannot account for when planning a trade.
It's almost as if they're trading against you.Its because of Elite trade why I chose never to open an IB account. Those stories are nightmares. there is no way to manage risk with an IB account since they add a big counter-party risk that you cannot account for when planning a trade.
Everyone should be aware of the f.o.p calendar spread issue. But that goddamn autoliquidate is predatory. No other word for it.You're thinking of futures margin. Futures p/l is handled as a cash flow, not FOPs. FOPs are m to m but as unrealized p/l. FOPs use SPAN or a risk scenario based margin, whatever, with a "one day risk horizon." These differences sometimes cause the margin for FOPs to be greater than the margin for the UL.
IB also can and sometimes does mandate margins greater than the exchange rates.
OP, auto liquidation is a scary reality at IB. I don't like it, it would be nice if IB could find a better way. But it's part of the price you pay to do business there.
The spread has two different ULs so the long option does not cover the short. It's not a calendar spread per se, you're trading the futures spread as well.
The contango in 2008/2009 reached ridiculous proportions. Your spread could lose far more than the debit.
I found this page enlightening.
http://ibkb.interactivebrokers.com/node/990
This guy can go to any broker in Chicago and get treated well. Dorman, advantage, whatever.I was hoping cdcaveman would reply.
There aren't many alternatives for pure options traders out there, at least not based on commissions.
Based on mentions here on ET: Thinkorswim (TDA) and Optionshouse come to mind.