For the sake of continuation, my margin jumped from $100k to $250k, a 150% increase, and I was forced to liquidate some of my positions at unfavorable prices. At this point, I am convinced that cheap commissions is not enough to keep me with IB. All I need to know now is if ToS (or OptionsXpress) has a better handle on portfolio margin. If either of them do, I will be moving my account. If not, I will need to change my trading strategy. IB can kiss my $2k commissions per month goodbye.
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Portfolio Margin Broker Comparison
- Thread starter MegaDeth
- Start date
Quote from MegaDeth:
For the sake of continuation, my margin jumped from $100k to $250k, a 150% increase, and I was forced to liquidate some of my positions at unfavorable prices. At this point, I am convinced that cheap commissions is not enough to keep me with IB. All I need to know now is if ToS (or OptionsXpress) has a better handle on portfolio margin. If either of them do, I will be moving my account. If not, I will need to change my trading strategy. IB can kiss my $2k commissions per month goodbye.
Did you consider rolling back to RegT margin? At least it is predictable.
Although I no longer trade with IB, I did for half a year, and did about a thousand option contracts. I also used portfolio margin.
Generally speaking, I never saw any sort of insane behavior in margin requirements. I do believe, however, that whatever intraday margin number they report via TWS (both order preview and account view) isn't necessarily "correct".
Some numbers, like buying power, are certainly correct... but portfolio margin is not. Think about it this way... many option strikes are thinly traded intraday. Any intraday price that they use to determine your margin is hugely out of date, and probably meaningless. They really have to wait for end of day (or settlement in the case of commodities) before they plug in whatever risk parameters and generate "market" prices for your options.
You should never, ever get a margin call based on violation of portfolio margin intra-day. I very much doubt you had to liquidate positions intraday because of an actual margin call from IB.
So, I know others have already said this, but just to reiterate:
- if you're giving us intra-day numbers you see in TWS... stop it. It's only confusing the issue.
- go pull up daily statements from IB (thru the website), and give us the margin numbers that you're seeing on those statements.
Generally speaking, I never saw any sort of insane behavior in margin requirements. I do believe, however, that whatever intraday margin number they report via TWS (both order preview and account view) isn't necessarily "correct".
Some numbers, like buying power, are certainly correct... but portfolio margin is not. Think about it this way... many option strikes are thinly traded intraday. Any intraday price that they use to determine your margin is hugely out of date, and probably meaningless. They really have to wait for end of day (or settlement in the case of commodities) before they plug in whatever risk parameters and generate "market" prices for your options.
You should never, ever get a margin call based on violation of portfolio margin intra-day. I very much doubt you had to liquidate positions intraday because of an actual margin call from IB.
So, I know others have already said this, but just to reiterate:
- if you're giving us intra-day numbers you see in TWS... stop it. It's only confusing the issue.
- go pull up daily statements from IB (thru the website), and give us the margin numbers that you're seeing on those statements.
Yes, but how do you calculate risk intraday? Look at distance from strike to the rapidly moving underlying? Not to suggest it's a hard calculation, but I'm not aware of anyone that does it on a real-time basis intraday.Quote from dagnyt:
so what?
margin is calculated on risk.
Mark
Every broker I've ever been with only gives prelim/intraday numbers based on marked to last trade. It's only end of day/settlement that I get a meaningful portfolio margin number.
Quote from heech:
Yes, but how do you calculate risk intraday?
Every broker I've ever been with only gives prelim/intraday numbers based on marked to last trade. It's only end of day/settlement that I get a meaningful portfolio margin number.
IB provides up to the minute (well every 2-3 minutes) margin calculation based on current prices. The swear it's accurate. In fact, they so strongly believe in the correctness of their numbers that they are willing to auto-close positions for anyone who goes over the margin limit on one of those 'every two minute' calculations.
During the market meltdown last year, my margin numbers were changing by more than 20k every couple of minutes (on some days), and occasionally the change was significantly larger. I attributed that to very wide markets and the possibility of distorted 'marks.' IB could not care less about my problems with that. They rule with an iron hand and a closed mind.
Mark
Interesting data point. Were you short options exclusively? Was your portfolio diversified among your options?Quote from heech:
Although I no longer trade with IB, I did for half a year, and did about a thousand option contracts. I also used portfolio margin.
Generally speaking, I never saw any sort of insane behavior in margin requirements. I do believe, however, that whatever intraday margin number they report via TWS (both order preview and account view) isn't necessarily "correct".
I don't know what exactly you mean by "margin call", but the excess cash in my account has gone negative based on intra-day changes. I have had to close positions to get back in to positive zone, but when I didn't IB auto-liquidated the needed positions to get my account in the black based on intra-day changes.
Some numbers, like buying power, are certainly correct... but portfolio margin is not. Think about it this way... many option strikes are thinly traded intraday. Any intraday price that they use to determine your margin is hugely out of date, and probably meaningless. They really have to wait for end of day (or settlement in the case of commodities) before they plug in whatever risk parameters and generate "market" prices for your options.
You should never, ever get a margin call based on violation of portfolio margin intra-day. I very much doubt you had to liquidate positions intraday because of an actual margin call from IB.
Like I've said repeatedly: I am referring to the maintenance margin shown in TWS at end of day (and in the margin report at the end of the day) to the maintenance margin shown in TWS the following morning before market open.
So, I know others have already said this, but just to reiterate:
- if you're giving us intra-day numbers you see in TWS... stop it. It's only confusing the issue.
I repeat, the margin numbers in the margin report from account statement is the same at the margin showing in TWS window.
- go pull up daily statements from IB (thru the website), and give us the margin numbers that you're seeing on those statements.
Based on some of the questions here, I am beginning to wonder if you guys have portfolio margin accounts with IB and don't have the same problem or if you're just finding this hard to believe? It'd help if you guys clarified.
I would say IB margin policy has gone crazy since last global financial turmoil so it's nothing surprising if such things happen on IB.
They claim they have rather competitive but safe margin ratios on their website. 50% this, 35% that. But, heck, that's not the truth.
They keep a special margin list. What special is you should expect a special list is meant to be special, that is, you normally expect only few (probably exotic or illiquid) products are in.
Well in fact most of the products have been listed in that special margin list, which are charged at 100% margin.
Their so-called competitive and safe margin are only gimmicks if it only applies to few products only. That's crazy. Who would expect such kinds of abnormality?
IB has become so paranoid to the extent that is unnecessary.
They charge most futures at 100% margin for daytraders unnecessarily when they have real-time margin monitoring which would liquidate your positions within seconds if you fall short of maintenance margin.
Do they expect we would lose 50% margin within a minute so it has to be charged at 100% margin to keep them safe? They have gone crazy! Full stop!
They claim they have rather competitive but safe margin ratios on their website. 50% this, 35% that. But, heck, that's not the truth.
They keep a special margin list. What special is you should expect a special list is meant to be special, that is, you normally expect only few (probably exotic or illiquid) products are in.
Well in fact most of the products have been listed in that special margin list, which are charged at 100% margin.
Their so-called competitive and safe margin are only gimmicks if it only applies to few products only. That's crazy. Who would expect such kinds of abnormality?
IB has become so paranoid to the extent that is unnecessary.
They charge most futures at 100% margin for daytraders unnecessarily when they have real-time margin monitoring which would liquidate your positions within seconds if you fall short of maintenance margin.
Do they expect we would lose 50% margin within a minute so it has to be charged at 100% margin to keep them safe? They have gone crazy! Full stop!
Quote from DirectTrader:
I would say IB margin policy has gone crazy since last global financial turmoil so it's nothing surprising if such things happen on IB.
They claim they have rather competitive but safe margin ratios on their website. 50% this, 35% that. But, heck, that's not the truth.
They keep a special margin list. What special is you should expect a special list is meant to be special, that is, you normally expect only few (probably exotic or illiquid) products are in.
Well in fact most of the products have been listed in that special margin list, which are charged at 100% margin.
Their so-called competitive and safe margin are only gimmicks if it only applies to few products only. That's crazy. Who would expect such kinds of abnormality?
IB has become so paranoid to the extent that is unnecessary.
They charge most futures at 100% margin for daytraders unnecessarily when they have real-time margin monitoring which would liquidate your positions within seconds if you fall short of maintenance margin.
Do they expect we would lose 50% margin within a minute so it has to be charged at 100% margin to keep them safe? They have gone crazy! Full stop!
They are crazy, well, dumb, in another way. As my PM margin soared in the day, I tried to close some positions. To my surprise, a $50 trade (10x5c short call contracts ) brought down the margin by $20000. Those contract were 6 days to expiry. I guess they just wanted to force me to buy back worthless shorts.