IB Exposure Fee

[darwin666]

I regularly short options to collect premium. I've never been charged an "exposure fee" by IB. I don't over-leverage myself though.

give me an example of what sort of shorting u do?

i am charged it.. hook line and sinker... i do SPY puts and calls weekly..... for example I am short 100 SPY puts next Friday expiry 227.. this cost me like 12 $ daily.. i think..

one thing i noticed... i dont have to pay if I am SHORT calls.. SPY calls. like 241 stirke for next friday... when u place a trade. now in IB... thick Client. u can see the exposure fee calcualtion the trade will do for u.

 

[Overnight]

HEY.. I AM IN THE SAME CONUNDRUM
...does Advantage Futures do options..? i only do options on the indexes.

SO FAR STICKING WITH IB...

Why do folks not just pick up the phone and ask the source, instead of getting information second-hand from a website like this unless a rep is around to answer?

People, companies are still run by humans. Call the company you wish to do business with and speak to a human representing the company.

 

[Sig]

Why do folks not just pick up the phone and ask the source, instead of getting information second-hand from a website like this unless a rep is around to answer?

People, companies are still run by humans. Call the company you wish to do business with and speak to a human representing the company.

You do know we're talking about Interactive Brokers here? This is probably the one company where you'll get far more accurate info from us bunch of jackwagons than from a company rep.

 

[Overnight]

You do know we're talking about Interactive Brokers here? This is probably the one company where you'll get far more accurate info from us bunch of jackwagons than from a company rep.

Oh, my bad. I was referring to this specific question...

...does Advantage Futures do options..? i only do options on the indexes...

 

[beefcaketrade]

give me an example of what sort of shorting u do?

i am charged it.. hook line and sinker... i do SPY puts and calls weekly..... for example I am short 100 SPY puts next Friday expiry 227.. this cost me like 12 $ daily.. i think..

one thing i noticed... i dont have to pay if I am SHORT calls.. SPY calls. like 241 stirke for next friday... when u place a trade. now in IB... thick Client. u can see the exposure fee calcualtion the trade will do for u.

$12 daily is harsh. How much premium do you get?

You can close it off and do a put credit spread to cap the theoretical loss and thus reduce or eliminate exposure fee. But the trading and cost of that put might make it not worthwhile. It works if it is long dated options, maybe 30 days ahead cuz $12/day adds up.

Actually naked short calls do get charged. I always knew about this exposure fee business for years. But unlike others I never got the email. Well, within the last few months I got one. Because I rolled options over one day early on a thursday since the fully covered options were expiring worthless in one day. Normally I roll on OPEX and that never seems to be a problem. But suddenly a day early and there is one day where I am technically naked short a bunch of calls and that was enough for me to JUST hit over $72K theoretical loss at 30% gap against me on the stress test and theoretically being charged $1/day (didn't get charged because of a weeks warning when fee takes effect and that exposure went away in a day at OPEX). And that resulted in a warning and being 'blacklisted' shall we say. All the while my leverage ratio was well under 0.5 even with the double options.

 

[Ryan81]

give me an example of what sort of shorting u do?

i am charged it.. hook line and sinker... i do SPY puts and calls weekly..... for example I am short 100 SPY puts next Friday expiry 227.. this cost me like 12 $ daily.. i think..

one thing i noticed... i dont have to pay if I am SHORT calls.. SPY calls. like 241 stirke for next friday... when u place a trade. now in IB... thick Client. u can see the exposure fee calcualtion the trade will do for u.

I just opened up TWS, and I modeled selling 100 of the 227/241 strangles in SPY.
I just brought up the "order confirmation" panel, and clicked the "Check Exposure Fee Impact" button. It does look like it would assess me a small exposure fee for this trade too.

Note that the exposure fee it is calculating for me is quite a bit less than the $12 fee that you are quoting... and without divulging the exact value of my account, I would say that at my account size, I would absolutely NOT feel comfortable selling 100 SPY strangles -- This is what I meant by saying "over leveraging". Incidentally, using the last bid/ask prices on these contracts, IB estimates that the credit for selling this strangle 1 week out (March 3rd) to be 7 to 10 cents. Talk about picking up pennies in-front of a steam-roller... especially if your exposure fee is greater than mine (which implies your available buying-power is smaller than mine... and I wouldn't be even close to comfortable with this trade.)

This is *exactly* why IB has implemented the exposure fee stuff... to catch people who are potentially putting IB's capital at risk by taking very large bets without the funds to back it up.