IB Margin requirements on FOP strategies

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whiskeyjack

I'm trading some ES future options with IB but it seems to me that the margin requirements are way too high compared to other brokers, i'm talking like 4 times more.

Let's look for example at the put ES FOP (w4) 2775: selling one changes the Initial margin for 10,477$ and the maintenance margin 8,382$ ; considering that (as per the CME page) the ES future is 6,000$ in margins and those options are out of the money, they should margin less than that.
The same option on the Swissquote platform is around 2,000$

Is this normal for IB? Is there a way to lower the margin requirements?
 
whiskeyjack said:
I'm trading some ES future options with IB but it seems to me that the margin requirements are way too high compared to other brokers, i'm talking like 4 times more.

Let's look for example at the put ES FOP (w4) 2775: selling one changes the Initial margin for 10,477$ and the maintenance margin 8,382$ ; considering that (as per the CME page) the ES future is 6,000$ in margins and those options are out of the money, they should margin less than that.
The same option on the Swissquote platform is around 2,000$

Is this normal for IB? Is there a way to lower the margin requirements?
More...

As the instrument is under CFTC, it gets SPANNED early and often. (Or, at least every 12 hours or so. :cool:) With that, the marginning will be all over the place -- whether via SPAN or IB-in-lieu-of-SPAN. If you wish straight marginning, consider the cheaper-to-write-anyway SPX options.
 
ZBZB said:
Buy a put to make a credit spread and it goes way down.
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I do usually buy puts above for hedging (10 sold 4 bought), with premium bought around 60%-80% of the premium sold but even like that it still margins a lot; i will look into buying an higher number of puts maintaining the above ratio as it looks the margin requirements remains high even on very deep OTM options.
Could probably just buy some tails deep OTM at 0.05-0.10 and it would still lower the margin position (that makes no sense really from an hedging point of view) but i hate to pay further commissions just like that
 
tommcginnis said:
As the instrument is under CFTC, it gets SPANNED early and often. (Or, at least every 12 hours or so. :cool:) With that, the marginning will be all over the place -- whether via SPAN or IB-in-lieu-of-SPAN. If you wish straight marginning, consider the cheaper-to-write-anyway SPX options.
More...

I never traded SPX; to be honest i never had a broker before asking so much in margin for the E-mini; i don't know much about how SPAN works but it seems strange that another broker like Swissquote can have margins 4 times lower on the same option
 
Not sure if this is related to your issue, but when I traded with them I noticed they treated every leg as independent, so for example if you bought an ES FOP vertical spread (meaning you mathematically couldn't lose more than you already paid for the spread) they still charged you a margin, in addition to the full cost of the spread! One of about 27 reasons I'm no longer with IB. The sad thing is that folks run into this over and over despite the literally hundreds of similar stories you can read here.
 
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