Is IB still my best option?

[ScroogeMcDuck]

I trade a bit of everything. Long/short equity, options, bonds, commodities, ssfs. I like that IB has all this in one place. But there are a couple problems with IB that really rustle my jimmies:

1. Ridiculously high margin requirements. If you want to short some 6month corporate bond that's trading above par, you need 50% margin. If you want to buy an option, you often need more than the cost of the option. If you want to buy a junk bond that's trading at 2 cents on the dollar, you need 5x that. If you want to short the front month of palladium, you need 50%.

2. Lack of native support for pegged-to-primary orders with nonzero offsets outside of ISLAND. I wish I had access to Hide-Not-Slide too, and whatever new order types HFT bros are using these days.

 

[maxinger]

there are pros and cons with IB.

Margin requirement is really high.
perhaps there are lots of big boys using IB.

I use IB mainly to trade hangseng as I can enter STOP order.
If I use another broker, I can't enter STOP order due to regulations or whatever

Do have multiple brokers

 

[FrankInLa]

Can you provide an example where IB charges more than the option premium when buying an option?

I trade a bit of everything. Long/short equity, options, bonds, commodities, ssfs. I like that IB has all this in one place. But there are a couple problems with IB that really rustle my jimmies:

1. Ridiculously high margin requirements. If you want to short some 6month corporate bond that's trading above par, you need 50% margin. If you want to buy an option, you often need more than the cost of the option. If you want to buy a junk bond that's trading at 2 cents on the dollar, you need 5x that. If you want to short the front month of palladium, you need 50%.

2. Lack of native support for pegged-to-primary orders with nonzero offsets outside of ISLAND. I wish I had access to Hide-Not-Slide too, and whatever new order types HFT bros are using these days.

 

[ScroogeMcDuck]

Can you provide an example where IB charges more than the option premium when buying an option?

How about some OTM calls on Silver in December.

 

[FrankInLa]

care to elaborate? Its impossible to gain a better understanding without any additional information on a contract that may or may not yet have expired, dating back several months. What specific contract? How was it priced in the market at that time? What premium did IB ask for? Have you spoken with IB? What did they say?

How about some OTM calls on Silver in December.

 

[Robert Morse]

We are an alternative for US Listed Equities, Options and Futures. We do not do the rest and we do not offer Universal accounts. Equity/Options and Futures are not together. https://www.lightspeed.com/testimonials/

I trade a bit of everything. Long/short equity, options, bonds, commodities, ssfs. I like that IB has all this in one place. But there are a couple problems with IB that really rustle my jimmies:

1. Ridiculously high margin requirements. If you want to short some 6month corporate bond that's trading above par, you need 50% margin. If you want to buy an option, you often need more than the cost of the option. If you want to buy a junk bond that's trading at 2 cents on the dollar, you need 5x that. If you want to short the front month of palladium, you need 50%.

2. Lack of native support for pegged-to-primary orders with nonzero offsets outside of ISLAND. I wish I had access to Hide-Not-Slide too, and whatever new order types HFT bros are using these days.

 

[Scataphagos]

I trade a bit of everything. Long/short equity, options, bonds, commodities, ssfs. I like that IB has all this in one place. But there are a couple problems with IB that really rustle my jimmies:

1. Ridiculously high margin requirements. If you want to short some 6month corporate bond that's trading above par, you need 50% margin. If you want to buy an option, you often need more than the cost of the option. If you want to buy a junk bond that's trading at 2 cents on the dollar, you need 5x that. If you want to short the front month of palladium, you need 50%.

2. Lack of native support for pegged-to-primary orders with nonzero offsets outside of ISLAND. I wish I had access to Hide-Not-Slide too, and whatever new order types HFT bros are using these days.

My sense is that universal accounts are uncommon. It takes a LOT of resources and back office to support universal. Not many brokers want to go to all that hassle.

That IB has "high" margins is a good thing for the safety of both customer and firm... tries to steer away from "excess" leverage, which can be a problem in turbulent times.

 

[Fonz]

I your account > 100K you can have a portfolio margin account (more leverage if you need).
The very low cost of margin + portfolio margin account are unmatched in my opinion.

 

[narafa]

My sense is that universal accounts are uncommon. It takes a LOT of resources and back office to support universal. Not many brokers want to go to all that hassle.

That IB has "high" margins is a good thing for the safety of both customer and firm... tries to steer away from "excess" leverage, which can be a problem in turbulent times.

It's true higher margins can help protect customers and steer them away from high leverage, but you have to remember that there is a ton of disclosures/disclaimers/declarations which you sign on if you want to trade certain products with IB. Not only that but also certain products are not available unless you declare a certain number of years of experience in that particular asset class.

Having said that, it's still good for IB to protect themselves and their customers in such periods of high volatility, but they are over-doing it honestly. Palladium futures margin at IB are double the exchange margin requirements. This is essentially a rip-off, so instead of $40k as required by the exchange, IB requires $88k for long and $100k for short, which is ridiculous.

 

[Scataphagos]

It's true higher margins can help protect customers and steer them away from high leverage, but you have to remember that there is a ton of disclosures/disclaimers/declarations which you sign on if you want to trade certain products with IB. Not only that but also certain products are not available unless you declare a certain number of years of experience in that particular asset class.

Having said that, it's still good for IB to protect themselves and their customers in such periods of high volatility, but they are over-doing it honestly. Palladium futures margin at IB are double the exchange margin requirements. This is essentially a rip-off, so instead of $40k as required by the exchange, IB requires $88k for long and $100k for short, which is ridiculous.

Sorry, but no sympathy. Their high margins are in part to protect all from know-nothing-noobs who will likely get into trouble if their leverage is not throttled*. If you want higher leverage than IB allows, you'll just have to look elsewhere. (Personally, I think IB is completely reasonable... though I don't have them as one of my brokers.)

*One of my futures brokers has a policy.... if you trade small, you can use the low daily margins... but if you trade big (meaning >10 contracts), you have to post full margin. Meaning.... small accounts which get into margin trouble are still small money. Big accounts which get into trouble are potentially a problem for the firm as well as the customer... therefore larger margins required. Makes total sense to me. (Of course I've always been on the "customer" side of things for my personal trading. But there have been a couple of times I was on the broker side, so I understand their mind-set about risk.)