IB Margin Problem
- Thread starter chucksil
- Start date
OK - here are answers to all your questions:
These were not weeklies, they were traditional 3rd Friday of the month options. I didn't try to close out the spread by selling the long call first - duh!!
Not sure why my limited posting history is an issue. I am 48 years old, and have been trading a long time. I usually just read the messages - perhaps I should have started off by saying I am a lurker, thank you all for all the information you have contributed that I have read through the years - and then explain my situation.
I am not an IB basher - I am a very happy customer. But this situation just does not make sense. On the phone, the IB rep walked me through my account, telling me which short option was paired off with which long option. My positions are all credit call vertical spreads on SPY. Exact same number of long and short. 120 in OCT and 60 in NOV. There are no other positions in my account.
When he said that there were 20 long NOV Calls covering 20 short OCT calls, I almost fell out of my chair! I repeatedly asked him why - he just said it is the automated margin process, and they can't change it. Even though it generated a clearly ridiculous result, which was 20 naked NOV Calls, with 20 long OCT calls not covering anything. Calculating the margin the correct way, which is clearly stated on the IB website as the difference in the strike prices, resulting in me only using about half of my equity - so I was nowhere near my limit.
Every spread was entered at roughly the same time, either through a spread order, or legging in. Usually 20 contracts at a time, either every day, or sometimes every other day. Remember, these were verticals, not calendar spreads.
These were not weeklies, they were traditional 3rd Friday of the month options. I didn't try to close out the spread by selling the long call first - duh!!
Not sure why my limited posting history is an issue. I am 48 years old, and have been trading a long time. I usually just read the messages - perhaps I should have started off by saying I am a lurker, thank you all for all the information you have contributed that I have read through the years - and then explain my situation.
I am not an IB basher - I am a very happy customer. But this situation just does not make sense. On the phone, the IB rep walked me through my account, telling me which short option was paired off with which long option. My positions are all credit call vertical spreads on SPY. Exact same number of long and short. 120 in OCT and 60 in NOV. There are no other positions in my account.
When he said that there were 20 long NOV Calls covering 20 short OCT calls, I almost fell out of my chair! I repeatedly asked him why - he just said it is the automated margin process, and they can't change it. Even though it generated a clearly ridiculous result, which was 20 naked NOV Calls, with 20 long OCT calls not covering anything. Calculating the margin the correct way, which is clearly stated on the IB website as the difference in the strike prices, resulting in me only using about half of my equity - so I was nowhere near my limit.
Every spread was entered at roughly the same time, either through a spread order, or legging in. Usually 20 contracts at a time, either every day, or sometimes every other day. Remember, these were verticals, not calendar spreads.
With Reg-t, entering a spread order produces one margin requirement. If you leg into a spread from the short side, it will create a higher call. As I recommend to everyone I deal with, even if there not my client, if the have enough assets, choose portfolio margin. It will help these issues.
"If you leg into a spread from the short side, it will create a higher call. "
his situation seems to be legging out out of a spread. if you leg out on the long side it will create a margin 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. " chucksil
it is straight forward. imagine he had no november spreads. he decides to close his october spread. he tries to sell his long calls.
he gets a reject notice because he would be in margin violation because of unhedeged short calls.
for the sake of clarity the op should provide a chronology of orders.
zdreg, please read my posts again - I have said several times I DID NOT try to close out a spread by selling the long calls first!!!!! Why do you keep saying that??? IB would not let me close out my spread because they had miscalculated my margin by assuming I had 20 short NOV calls uncovered, even though they WERE covered. End of story. No need for me to go through all my trade records and give you a full accounting of it - I have already written what the problem was, very clearly.
I did a search. you never said until now I DID NOT try to close out a spread by selling the long calls first!!!!! .
now that u have explicitly said it you have shown that u have a legitimate issue.
bottom line u have to speak to someone else at the firm to get satisfaction.
lots of luck.
These verticals intermonth such as what you have when you are long m1 vertical and short m2 verticals can be construed as being long cdr in 1 strike and short calendar in another. We all know it does not make sense but I am wondering what was the first order you tried to put in that caused this problem.
Did you do an outright sell or buy option a single leg Or did you put in an order to buy the Oct vertical. If you had put on an order to buy an oct bertical (to close the losing short vertical in oct) it just might be a software glitch) for that does not make sense at all.
Did you do an outright sell or buy option a single leg Or did you put in an order to buy the Oct vertical. If you had put on an order to buy an oct bertical (to close the losing short vertical in oct) it just might be a software glitch) for that does not make sense at all.