IB maintenance margin calculator

M

merc1979

How does IB calculate margin for short calls and puts. Can someone give an example. I looked at the site and can't understand the description.

Thanks
 
Its at the following link http://www.interactivebrokers.com/en/p.php?f=margin

Short Naked Call

100% * option market value + (20% * underlying market value - out of the money amount or 10% * underlying market value, whichever is greater) or $2.50 * multiplier * number of contracts, whichever is greater.

20% above is 15% for broad based index options. Short sale proceeds are applied to cash. Not allowed for IRA accounts.

IB has a minimum margin of 2.5 USD per share of the underlying. This minimum does not apply to RegT margin.

Short Naked Put

100% * option market value + (20% * underlying market value - out of the money amount or 10% * strike price, whichever is greater) or $2.50 * multiplier * number of contracts, whichever is greater.

20% above is 15% for broad based index options. Short sale proceeds are applied to cash. Same rules as cash for IRA Margin Accounts.

IB has a minimum margin of 2.5 USD per share of the underlying. This minimum does not apply to RegT margin.
 
I did some quick comparison with some far OTM (2SD) credit spreads in both ToS and IB and it seems like IB margin requirement is approx 3x SPAN
Then I did some ATM short straddles and IB was only about 1.2x SPAN
Anyone know why they seem to charge higher amounts the further out you go? Is it the higher tail risk, if so does anyone have a calculation that they do.
From IB website http://ibkb.interactivebrokers.com/node/254
"The SPAN margin requirements are compared against IB's pre-defined extreme market move scenarios and the greater of the two are utilized as margin requirement."

What is IB's pre-defined extreme market move scenarios?
 
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I think that the point is, that they want more money for commissions. For example they have high margins for naked PUT, so they push you to trade spread = more money for them.

I don't like their complicated commission model, so I switched to TradeStation - it's much cheaper if you trade more contracts.
 
Bibr said:
I think that the point is, that they want more money for commissions. For example they have high margins for naked PUT, so they push you to trade spread = more money for them.

I don't like their complicated commission model, so I switched to TradeStation - it's much cheaper if you trade more contracts.
More...

Did you check the annual margin commision? IB is the lowest
About the naked it depends on your account type.. for PM account it wont take you that much commision
 
Gimpyron said:
Did you check the annual margin commision? IB is the lowest
About the naked it depends on your account type.. for PM account it wont take you that much commision
More...
I just opened the account at TradeStation and I'll trade for a while and I'll see. I want to have two brokers anyway, in the case one of them goes bankrupt. It looks very risky for me to see all my cash at one account.

Actually you are right, that I am maybe mistaken, but I'll see after few months of trading with both of them. The problem is, that with IB you never know how much is the commission, because the calculation is so complicated.

I don't trade naked PUTs/CALLs, but many people complain about IB margin.
 
Yep i was one of the complainers that's why i consider PM account (req' 110k usd)
I will be happy if you dont mind,to share with me the conclusion of your little research about the commissions
 
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