IB collateral restriction on writing options?

M

mizhael

When I experimented it, sometimes it only allows me to write as small as 5 to 6 contracts. Why is that? Where do I find a formula for how does IB calculate the collateral requirement for selling options?

If I know the formula IB uses, probably I could find a stock that allows me to write more contracts.

I am pretty sure my overall balance was well above day-trade limit.
 
Quote from mizhael:

When I experimented it, sometimes it only allows me to write as small as 5 to 6 contracts. Why is that? Where do I find a formula for how does IB calculate the collateral requirement for selling options?

If I know the formula IB uses, probably I could find a stock that allows me to write more contracts.

I am pretty sure my overall balance was well above day-trade limit.
More...

http://www.interactivebrokers.com/en/trading/marginRequirements/margin.php?ib_entity=llc

Mark
 
crystal clear :)

Short Naked Call
100% * option market value + maximum ((20% * underlying market value - out of the money amount), (10% * underlying market value), ($2.50 * multiplier * number of contracts)). 20% above is 15% for broad based index options. Short sale proceeds are applied to cash. Not allowed for IRA accounts.

Short Naked Put
100% * option market value + maximum ((20% * underlying market value - out of the money amount), (10% * strike price), ($2.50 * multiplier * number of contracts)). 20% above is 15% for broad based index options. Short sale proceeds are applied to cash.
Same rules as cash for IRA Margin Accounts.
 
Quote from mizhael:

Thanks!

So only the calendar spreads don't need to post collateral?
More...

When you PAY in full for an option position, there is no additional margin requirement.

that means:

buying calls
buying puts
buying call spreads,
buying put spreads
buying a butterfly
buying a condor
etc

Mark
 
Quote from mizhael:

So only the calendar spreads don't need to post collateral?
More...
A long Calendar Spread is a special case of a call or put spread, whose margin requirements are described in the web page link that dagnyt posted.
 
On IB, there is a "check margin" feature. If I remember correctly, this feature needs to be activated. I use it all the time. It is necessary for writing options so you know the amount of initial margin all the time. And as you know, margin is updated throughout the day and into the overnight session.
 
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