IB has lots of guidance for managing margin/liquidation risk. Open a chat window with them and they can point you to the latest.
Interactive Brokers and Leverage
- Thread starter tonyf
- Start date
IB has lots of guidance for managing margin/liquidation risk. Open a chat window with them and they can point you to the latest.
Am not familiar with the details of cashflows.
If my account has 100cash, long 200 stocks, short 100stocks. I incur interest cost although cash shown is 0 as the 100 margin for long is separate from the short proceeds and are charged at a +spread while short proceeds a - spread.
How about if 100cash, long200 stocks, short 100options? The option proceeds is cash into the account to directly offset the long borrowing(ignore settlement lag)? So I don't incur interest cost?
If my account has 100cash, long 200 stocks, short 100stocks. I incur interest cost although cash shown is 0 as the 100 margin for long is separate from the short proceeds and are charged at a +spread while short proceeds a - spread.
How about if 100cash, long200 stocks, short 100options? The option proceeds is cash into the account to directly offset the long borrowing(ignore settlement lag)? So I don't incur interest cost?
Can you backtest your strategy? I’d look at the max drawdown over past eg 15 years, double it, add that to the margin you typically run, and make sure your account balance is at least that. You want to be well, well clear of IB deciding to liquidate your portfolio. They’re ruthless (which is good for everyone else).
The best starting point would be to monitor the so-called SMA value. As long as that is positive near the end of the US trading day is there no problem. If it is negative will IB liquidate a portion of your positions, until it becomes positive.