Portfolio Margin Broker Comparison

[wayneL]

The almost precise doubling/halving of you margin make me think it's someting to do with IB's day margin (which is 50% of the overnight margin requirement) and overnight margin.

Could be wrong, but I'd seek an answer to that question first.

 

[weewilly]

i can tell you how TOS Portfolio Margin would margin your position if you tell us what it is.

 

[dagnyt]

Quote from MegaDeth:

Mark,

I understand what you mean. But you know that something is grossly wrong when your margin increases with the market moving in your favor and vice versa. .

Question: Are you comparing the margin requirements at the same time of day?

Why don't you try comparing the daily margin report that's available to you under 'account management'

You can go back at look at each days report. Compare those and see if there is a discrepancy.

When you look at night, you are not seeing accurate prices and there is no reason to assume the margin is accurate either.

Mark

 

[tman]

Quote from MegaDeth:

Mark,

I understand what you mean. But you know that something is grossly wrong when your margin increases with the market moving in your favor and vice versa. This morning, the market moved against me, yet my current margin requirement dropped from $105K to 51K!! It just doesn't make sense, even without looking at my portfolio! I have also noticed that when instead of closing a position, if I create a credit spread (potentially giving me limited profit), the margin requirement stays high.

It is clear from all the other posts that there is a serious flaw in IB portfolio margin calculations. The rapid whipsaw in the margin required is quite disruptive to my trading style and forces me to make trades that I don't plan for. I am considering ThinkOrSwim if their portfolio margin calculation is reliable and does not have similar issues. This thread would benefit a lot if someone with ToS noted their experience with portfolio margin on this thread.

Could it be that IB recalculates portfolio margin with respect to changes in implied vol in addition to change in price???? So market can move "with" you and vol can move "against" you.

 

[mushinseeker]

Creating a credit spread could conceivably increase your margin bigtime due to gamma. For example if you sell a front month credit vertical spread for $1 and the distance between strikes is $5, they will probably penalize you big time since a 3 sigma move in your favor would make you $1 but the same move on the other side would lose you $4. You might want to talk to the guys at TOS since they have portfolio margin and they seem to have a good handle on it. Good luck.

 

[MegaDeth]

Could be. I am in the process of speaking with the Portfolio Margin personnel at ToS and will report with what they have to say. Ideally, I would like to simulate a portfolio margin with them with my current position in IB so I can do an apples-apples comparison.

 

[MegaDeth]

Quote from dagnyt:

Question: Are you comparing the margin requirements at the same time of day?

Why don't you try comparing the daily margin report that's available to you under 'account management'

You can go back at look at each days report. Compare those and see if there is a discrepancy.

When you look at night, you are not seeing accurate prices and there is no reason to assume the margin is accurate either.

Mark

Mark,

The margin values that I am comparing are during the day and the morning of the next day. For example, after making a few trades yesterday, the maintenance margin was $79k. This is the margin that was showing all day in TWS until midnight PST (the daily statement was not yet available). This is exactly the value that showed up in the margin report for yesterday under Account Management. However, in the morning the maintenance margin had jumped up to $103k. I must mention that today the market moved against me, but at market open, the futures were only moderately down. I don't understand how they to explain a $25k jump in margin overnight.

I hope this gives you an idea of what I am trying to communicate. While in theory, an increase in volatility can explain the changing margin requirements, I do not see change in volatility tantamount to the change in margin.

 

[drcha]

I have seen these dramatic changes in margin overnight as well. I assumed that they are not updating some things intraday, but are doing it overnight. As best I can tell, this margin calculation gets updated several hours after market close; the reason I think this is because I have had the experience of viewing my portfolio page after hours and having it suddenly update my margin requirement.

Guess I have not investigated it much because I generally use just a fraction of my available capital. But I can see how hard it would be to predict what is available to you if you are trading in a bigger way.

 

[MegaDeth]

My wife put on her conspiracy theory hat and suggested that maybe IB intentionally whipsaws accounts with portfolio margin to earn more commission. Not impossible.

 

[hedgex]

Quote from MegaDeth:

My wife put on her conspiracy theory hat and suggested that maybe IB intentionally whipsaws accounts with portfolio margin to earn more commission. Not impossible.

Not impossible indeed. I asked their rep and was told that it was the real-time margin that counts, that the margin report was generated at 4:30 PM ET.

I have been forced to make more trades just to maintain the margin due to the swing. The rep also told me it was impossible to explain, or predict, the impact on margin of individual positions.