Portfolio Margining

Q

QHTCapital

I'm starting this thread to start some discussion on the advantages & disadvantages of Portfolio Margining.

1. The lowest net liquidating value requirement I've seen for PM is $100k (TOS & OXPS). Any brokers with lower requirements?

2. What are the strategies that benefit the most from PM?

3. Any experiences (good or bad) you'd like to share using PM?
 
Quote from QHTCapital:

I'm starting this thread to start some discussion on the advantages & disadvantages of Portfolio Margining.

1. The lowest net liquidating value requirement I've seen for PM is $100k (TOS & OXPS). Any brokers with lower requirements?

2. What are the strategies that benefit the most from PM?

3. Any experiences (good or bad) you'd like to share using PM?
More...

1) $100k

2) Unbounded risk. Replication strategies. Spot equity trading at 15%.
 
I just started using PM last month so the jury is still out in my mind.

With that, I have found that writting EFPs to provide greater "interest" on funds than what IB gives PM a big leg up. if you wrote 100K worth of EFPs it appears you will only take a very small (like a thousands dollars but don't hold me to that amount) hit in buying power.

Also, I have been able to have greater than 4x margin even overnight but thats with several stocks at one time not all in one.

I do a lot of covered options and it appears that PM takes that into account in the margin math.

Once your on PM though you cant see what your margin would have been with Reg T so you have to manually calculate it to see what it would have been.

If you put all your eggs in one basket with your trades you may want to stay with Reg T as you can end up with lower margin than what you currently have.

If you do any hedging PM appears to be a no brainer and if you don't you may want to think about ways to increase the interest earned on the money sitting dead every night.

Bottom line for me is that I can sell EFPs and deep in the money covered options and not have to take a hit with my normal day trades.
 
Quote from blackjack007:

qht - riskless positions benefit the most
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A conversion or box/roll won't benefit much with PM. The biggest benefit is in an atm, long-duration single put or call purchase.
 
Quote from atticus:

A conversion or box/roll won't benefit much with PM. The biggest benefit is in an atm, long-duration single put or call purchase.
More...

What about reversals? Wouldn't your short stock margining benefit from PM? Thanks.
 
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