IB Margin Problem

C

chucksil

I have been very happy with IB for many years - never had a problem, and great options executions and commissions. For example, last week, sold 20 SPY calls as part of a vertical credit spread, for 30 cents each commission. Often I can buy at bid and sell at ask, even when price doesn't trade through my level.

But today was a real wake up call. I tried to close some SPY OCT call credit spreads for a loss, and TWS would not let me, saying that it would increase my margin deficit. This didn't make sense for 2 reasons - by closing the position, I would be REDUCING my margin requirement, and I knew I was nowhere near my margin limit.

I called IB at 12PM, and within 2 minutes I was speaking with a rep. He spent 15 minutes with me, very friendly, but he explained there was nothing they could do. Turns out TWS has this weird way of calculating margin sometimes. I only do credit spreads on SPY, so at all times the number of short calls always equals the number of long calls. But TWS used some NOV long calls to offset some OCT short calls, such that I ended up with TWS treating 20 NOV short calls as naked! The 20 OCT long calls that were bought to offset the OCT short calls were not offsetting anything.

So I had to do a lot of trades today to eliminate this situation, that I would never have done.

Anyone else have this problem?
 
Quote from chucksil:

I have been very happy with IB for many years - never had a problem, and great options executions and commissions. For example, last week, sold 20 SPY calls as part of a vertical credit spread, for 30 cents each commission. Often I can buy at bid and sell at ask, even when price doesn't trade through my level.

But today was a real wake up call. I tried to close some SPY OCT call credit spreads for a loss, and TWS would not let me, saying that it would increase my margin deficit. This didn't make sense for 2 reasons - by closing the position, I would be REDUCING my margin requirement, and I knew I was nowhere near my margin limit.

I called IB at 12PM, and within 2 minutes I was speaking with a rep. He spent 15 minutes with me, very friendly, but he explained there was nothing they could do. Turns out TWS has this weird way of calculating margin sometimes. I only do credit spreads on SPY, so at all times the number of short calls always equals the number of long calls. But TWS used some NOV long calls to offset some OCT short calls, such that I ended up with TWS treating 20 NOV short calls as naked! The 20 OCT long calls that were bought to offset the OCT short calls were not offsetting anything.

So I had to do a lot of trades today to eliminate this situation, that I would never have done.

Anyone else have this problem?
More...

Is this a REG-T or CPM account?
 
The issue might have to do with Reg-T rules. If you can upgrade your account to customer portfolio margin, (Over $100K at IB) my firm requires more, it may solve your problem.

Bob
 
Quote from ASE1245:

The issue might have to do with Reg-T rules. If you can upgrade your account to customer portfolio margin, (Over $100K at IB) my firm requires more, it may solve your problem.

Bob
More...

that is a pretty radical solution even if u should turn out to be right.
unfortunately the OP cannot expect an answer if refuses to state his orginal position and then the sequence of transactions. the minute people use the word weird about a broker the suspicion is the person doesn't understand the rules.
 
Quote from zdreg:

that is a pretty radical solution even if u should turn out to be right.
unfortunately the OP cannot expect an answer if refuses to state his orginal position and then the sequence of transactions. the minute people use the weird about a broker the suspicion is the person doesn't understand the rules.
More...

If his account is already funded with over $100K, and he applies for CPM, why is that "radical". CPM is risk based not strategy based, so trading options is much easier on CPM. You just need to stay over $100K. I don't recommend it for traders under $125K.
 
Well, zdreg, you would lose that bet. Simply put, I was short 120 OCT SPY calls between 123 and 130, and long 120 OCT SPY calls between 124 and 131. I recently opened up some Nov credit spreads on SPY - short 60 NOV SPY calls, and long 60 NOV calls. The margin required is a very simple calculation - the difference in the strike prices, because every short call is covered by a long call.

Re-read my OP - IB told me that they used 20 of the long NOV calls to cover 20 of my short OCT calls, which left 20 of my short NOV SPY calls naked, and 20 of my OCT long calls doing nothing!
 
Quote from ASE1245:

If his account is already funded with over $100K, and he applies for CPM, why is that "radical". CPM is risk based not strategy based, so trading options is much easier on CPM. You just need to stay over $100K. I don't recommend it for traders under $125K.
More...

the reason it is radical because the op is trying to be conservative in his actions.
 
You must log in or register to reply here.
Back
Top