Quote from stefan_777:
He doesn't have a cash account because he's holding a put spread with American style options; SPY's. Cash accounts can only do put spreads with European options.
Stop talking about naked puts. It's a put spread and it has its own margin requirements that are simple and clearly visible on IB's website pictured above.
By the story of the OP, he met both the initial and maintenance. You can't enter the position without paying the initial, and since the maintenance is the same as the initial, you can't go under margined based on these clear and simple rules.
Stefan_777,
I think you are misinterpreting IB's margin rules for cash accounts.
Take a look at the row for "Short Naked Puts", in the same grid from which you showed us the row for put spreads. Look at the third box in that row, which gives the rule governing Short Naked Puts in a cash account. Notice it says "Put Strike Price" is the margin requirement for a Short Naked Put in a cash account. Nothing suggests that this requirement is limited to European style options, or that Short Naked American style puts are excluded, or that Short Naked physically settled puts are excluded, or that any Short Naked put of any kind is excluded. I have no cash account, so I can't test this, but you can see for yourself in the grid (see third row down, and third column from the left). The grid clearly states that Short Naked Puts are permitted in cash accounts.
You believe that American style put spreads are not permitted for cash accounts. Are we to believe that American style naked short puts are permitted in cash accounts, but that, as you assert, American style put spreads are not permitted? This would make no sense. Naked short puts are much more dangerous than put spreads. If American style naked short puts are permitted in cash accounts, then surely also American style put spreads are also permitted in cash accounts.
You are simply misinterpreting the margin requirement, which you circled, for put spreads in cash accounts. The meaning of the requirement, which says "Same as Margin Account...Both options must be European style cash settled" means that if a put spread is not European style, or is not cash settled, then IB's margin rules do not recognize the put spread, and the put spread requirement does not apply. Such a situation instead relegates the put spread to be margined according to the sum of the two separate requirements for each of its two legs. These requirements are: for the long put, NONE, and for the short put, the put strike price (the same requirement as for a Short Naked Put, even though it is not naked; it is not naked, but IB's margin rules do not, in such a case, recognize the presence of a put spread, and so they treat the put spread just like a Short Naked Put).
Perhaps the OP was allowed to enter the put spread because he met all margin requirements for a Short Naked Put, at the time of entry. Perhaps he incurred subsequent losses on other positions, and liquidated those positions, with the result that his account no longer met the margin requirements for Short Naked Puts in a cash account. Perhaps, minutes later, this triggered auto-liquidation.
If all this is true, and if the OP was using a cash account, then he was at least partially at fault for violating margin requirements. Perhaps IB is also partially at fault, for unclear documentation, but not for erroneously choosing to auto-liquidate. If this was a cash account, then it appears the OP violated IB's margin rules, didn't know what he was doing, and shouldn't even have been trading options.
