possible to increase your margin deficit buying back calls, used for covered call?

[smallfil]

is it true that buying back a short call in a covered call increases margin requirement? l thought it requires no margin to buy or buy back a call that is covered. I was long 100 shares of SQ with a covered call. I was in margin deficit with IB so tried to buy back the covered call, but it wouldn't allow it saying that it increased the margin deficit. I called IB and generally the staff are unhelpful at best. Got told couldn't buy back the covered call as it increases the margin requirement for the stock position? possible? and on me asking how i could increase my excess liquidity was told it was my responsibility to find. They did say l want to be more delta neutral, well buying back the call, would of made it more delta neutral, but disallowed. Buying back short stock wouldn't help either, as it increased margin deficit?! please explain

The way I understand it is you bought shares of stock in XYZ company which say cost $10 a share and you bought 100 shares. Total cost is $1,000. However, you only had $600 in your broker account so, used margin (which is essentially a loan from your broker) for the $400 difference plus interest and fees. Next, you sell a call on your XYZ shares getting you a credit for say $50. XYZ stock goes down in value to $8 a share. Your stock holdings now are worth just $800 and even with the $50 credit, you only have $850. You broker now wants more monies from you and you get a margin call. The broker is only protecting their interest. Take note, you also, have a liability on your covered call since, if it is in the money at expiration, you would have to deliver the shares at the call price. Your solution is put up more monies to get rid of the margin call. Then, sell your call option to close it out. Depending on the value of your shares, maybe, sell your shares too right after. Retail traders with small balances should stick with their cash balance only. Do not use margin. That way, you do not get a margin call.

 

[FSU]

Looks like your best option is to get out of part/all of the position as a spread. Enter a spread order to sell 100 shares of stock and buy 1 call. You can see the affect of your total margin requirement when you enter the spread.