Can anyone explain to me why IB would charge me a $5200 margin requirement on a naked put sell on ISE stock at a $22.50 strike price for 1 contract? The most I could lose is $2250 if I got assigned and the stock went to zero. The way IB explained it to me is that since the ISE stock is currently trading at $52/share, that's what my margin requirement would be. Huh? What kind of logic is that? I'd be buying the stock at $22.50, but yet they want to charge me based on where the stock is trading today. Actually, according to the "check margin" feature that IB has, it was calculating my margin requirement to be for this trade at $4500, which is double the strike price. Doesn't make sense. I've been selling naked puts with IB for a long time and this is the first I noticed this type of calculation. It's eating up a lot of my capital. Plus, most brokerages calculate margin for a naked put sell in a much different way, which is usually a smaller figure. Anyone else noticing this issue?
Margin Requirement At IB For Options
- Thread starter syd697
- Start date
luh3417,
Can you point me to an area of IB's site that says their IRAs do not have the "usual" margin benefits, or at least somewhere that says no one is allowed to offer an IRA like that? I'm not disputing what you say, I just want to know for future reference in terms of what trades I might try to execute in the future. Thanks.
Can you point me to an area of IB's site that says their IRAs do not have the "usual" margin benefits, or at least somewhere that says no one is allowed to offer an IRA like that? I'm not disputing what you say, I just want to know for future reference in terms of what trades I might try to execute in the future. Thanks.
Quote from the IB website (not hard to find):
"IRA Account Types
US resident customers may open cash or margin Individual Retirement Accounts (IRA). IRA margin accounts may never borrow, but are afforded all the other benefits of a margin account such as the ability to day trade, and the ability to trade multiple currencies and multiple currency products. IRA accounts may be opened in any base currency, but when trading in a non-base currency product (margin accounts only) a currency trade must first be executed as you cannot borrow currencies. Customers are advised to consult a tax specialist for further details on IRA rules and regulations."
http://www.interactivebrokers.com/en/accounts/iraClasses.php?ib_entity=llc
"IRA Account Types
US resident customers may open cash or margin Individual Retirement Accounts (IRA). IRA margin accounts may never borrow, but are afforded all the other benefits of a margin account such as the ability to day trade, and the ability to trade multiple currencies and multiple currency products. IRA accounts may be opened in any base currency, but when trading in a non-base currency product (margin accounts only) a currency trade must first be executed as you cannot borrow currencies. Customers are advised to consult a tax specialist for further details on IRA rules and regulations."
http://www.interactivebrokers.com/en/accounts/iraClasses.php?ib_entity=llc
Funny I never encountered that limitation in many years of trading in an IRA.
Although I can't honestly remember that I ever needed cash from a prior trade to execute another trade, I gotta believe it must have occurred in the last say 10 years.
Are you sure that you need settled cash to buy stock in an IRA? Although maybe this question is already answered because this no-longer sounds like a limitation with IB. Maybe most other brokers always had this capability.
Don