Interactive Brokers Incorrect Option Margin Requirements

[algotrader12]

What am I avoiding ? No not a single margin violation. I am managing my margin very carefully.

So you don't use IB, ok in that case the fact that you have no issues does not tell me much. But thanks anyway.

If someone else who uses IB could check the above positions, I would appreciate it.

 

[ajacobson]

Buy 1000 XIV at Schwab

 

[ajacobson]

1000 XIV was 46000 margin and a little under 28000 PM. PM is the pseudo optionsXpress account that Schwab is creating now for the oX integration. Called a buddy at IB, but he had gone home for the day. TD was virtually identical.

 

[JackRab]

Jack, in one account I own 50K in options, have about 50K cash. My initial margin is over 50K, so I can;t open a new position. So, again my portfolio: 50% in being long options, 50% cash, where is risk? where is logic ? Lets stop talking about hypotheticals here. Show me the risk ?

Since I don't know your entire portfolio, I can't say too much about this. And I do know (from experience) that IB's margin reqs can get stuffed up, I was stuck for 6 weeks with maybe a similar situation as you. Mine had to do with day/end-of-day margin issues, plenty of cash but the system failed. They did explain they were in the process of overhauling their margining/risk algo.

That said, just because you're long options in value doesn't mean you have no risk... for all I know, you could be in a 1:4 put spread. Long 1 and short 4 tiny ones. Or short puts long calls...
The risk blows out at one point.

That can also be a possible explanation for you not able to buy/long XIV... your risk might blow out more to the downside, so you need more margin to cover that.

What is your riskprofile? Can you check your risk navigator for VAR?

btw, I use IB and no issues with XIV (closed at the moment though). Initial Margin for 100 long = 7833 and Maint Margin is 7829

 

[JackRab]

I am not posting my portfolio here, but I can do better. Here is what I get if I try to purchase 100 shares of XIV current price $92.63 initial margin required $18566. So again need 18566 to purchase $9263 in etn. You can check this by previewing a buy order of 100 shares on XIV.

If you're nett short of puts... buying XIV increases the risk on those puts... so that margin increase might be totally warranted. Again, since we don't know your portfolio... we're only guessing and it's all hypothetical.

(But IB has had margin screw ups before, so who knows)

 

[truetype]

since we don't know your portfolio... we're only guessing and it's all hypothetical.

Exactly. Thread after thread with fragments of a portfolio, followed by "IB sucks!!" So tiresome.

 

[HobbyTrading]

I am not posting my portfolio here, but I can do better. Here is what I get if I try to purchase 100 shares of XIV current price $92.63 initial margin required $18566. So again need 18566 to purchase $9263 in etn. You can check this by previewing a buy order of 100 shares on XIV.

I have repeated your "what if" trade on both my IB accounts. One account is rather leveraged and doesn't have much spare. On this account I get exactly the same response as you show here. Including the large red section in the window stating that I need 16277 USD margin which is not available in this account. IB blocks this trade in this account.
My other account is not leveraged. Here I get a normal window, without any red bars. Here the initial margin requirement is 9288 USD and the maintenance margin 9269 USD (by the way: this is pre-market as the US market is currently closed). IB would not block this trade if wanted to buy these 100 shares XIV.
In other words: I think that IB blocks your intended trade as not enough margin is available in your account due to your other positions.

 

[Visaria]

These absurd margin requirements are happening on my account as well...I'm trading with IB UK...I have positions in various vol futures, etns and options.

 

[Sig]

I have repeated your "what if" trade on both my IB accounts. One account is rather leveraged and doesn't have much spare. On this account I get exactly the same response as you show here. Including the large red section in the window stating that I need 16277 USD margin which is not available in this account. IB blocks this trade in this account.
My other account is not leveraged. Here I get a normal window, without any red bars. Here the initial margin requirement is 9288 USD and the maintenance margin 9269 USD (by the way: this is pre-market as the US market is currently closed). IB would not block this trade if wanted to buy these 100 shares XIV.
In other words: I think that IB blocks your intended trade as not enough margin is available in your account due to your other positions.

So you're saying that the amount of margin needed for product X is variable based on how margined your account is? So you need 50% margin for ticker X, but if you have another position that uses some of your margin they single you out and you require 100% or 120% margin for that same ticker X? Unless you have a PM account that's absurd. In fact now that I say that it sounds like what is happening is that they mistakenly applied part of their PM algorithm to Reg T accounts?

 

[HobbyTrading]

So you're saying that the amount of margin needed for product X is variable based on how margined your account is? So you need 50% margin for ticker X, but if you have another position that uses some of your margin they single you out and you require 100% or 120% margin for that same ticker X? Unless you have a PM account that's absurd. In fact now that I say that it sounds like what is happening is that they mistakenly applied part of their PM algorithm to Reg T accounts?

To clarify: both my accounts are RegT accounts, not Portfolio Margin accounts. I am simply reporting how IB responds to these "what if" orders, because that is what was asked a few times in this thread. Whether this result is normal behaviour, or strange behaviour on IB's side I cannot judge.