Q: mechanics of IB maintenance margin/excess liquidity

T

toshiaki

Question about the mechanics of interactive brokers maintenance margin and excess liquidity

End of day yesterday: I had 60k excess liquidity
Today: my account shows under 9k excess liquidity
Reason: maintenance margin on bullish credit spreads on Boeing (210/205 and 210/190) expiring June 12 have increased substantially - the maintenance margin on the 210/205 is 120% of the max loss and the maintenance margin on the 210/190 is about 85% of max loss. When I engage in spreads I use IB's strategy builder so the UI does show them as spreads but I guess IB doesn't calculate it in that way.

(edit: the IB flicker shows that the net loss from premarket values is 7k but my maintenance margin increased by 50k)

I guess my question is: if my excess liquidity drops to 0, will IB choose to liquidate my Boeing positions, which have a disproportionately high maintenance requirement or will they randomly select my other positions? I assume IB won't take the cash balance (I have sufficient cash to cover a 100% max loss several times over) because it wouldn't actually solve the issue.

Ultimately it doesn't matter to me what IB liquidates because I would just close my Boeing spreads for a small loss and buy back what IB liquidated by it would be annoying.

Side note: are there any other reputable brokers that calculate the maintenance requirement of spreads in a more reasonable way?
 
Cash covered put doesn't make a difference, they base it on the volatility and price of the option. Check their margin webpage. I believe they liquidate the nearest dated options
 
I'm currently having have issue with IB, I have 200k in the account with portfolio margin. My portfolio consists of options and stocks, highly leveraged but almost fully hedged regardless of market movements.
Problem is similar to the OP, at 20:00 EST, I have around 50k execess liquidity, 4 hours later, it jumps to -20k excess liquidity. This happened like twice already this week, on Wednesday where excess liquidity dropped 30k overnight, and 70k again on Thursday night.
 
I have been continuously having problems with initial and maintenance margin swings. Today was particularly bad, though.

Often times, my net account value will go up, but the maintenance margin will increase. Like today during the pre-market session my P&L went up by 2k, but the maintenance margin simultaneously increased by 7k. I only trade stocks, btw, not options.

My best guess is that sometimes IB increases margin requirements for certain names in real-time, based on volatility, or whatever.

Relatedly, I noticed that IB's portfolio margin simulator usually shows better excess liquidity than the regular margin account. Maybe portfolio margin is worth considering if your account value is sufficient.
 
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I just unwinded some of the positions on the account. Apparently 50k face value short calls (hedged with way out of money short puts) used about 100k margin (think this tripled in the last few days), and 2.6m worth of other hedged positions used 100k margin.
 
Portfolio margin is complex and is calculated on the fly. It is supposed to be more capital efficient compared to Reg T margin. IB has a built in tool to help analyze your positions.
 
qaz said:
Portfolio margin is complex and is calculated on the fly. It is supposed to be more capital efficient compared to Reg T margin. IB has a built in tool to help analyze your positions.
More...
Doesnt work when they increase margin requirement on the fly.
 
nijshar28 said:
I have been continuously having problems with initial and maintenance margin swings. Today was particularly bad, though.

Often times, my net account value will go up, but the maintenance margin will increase. Like today during the pre-market session my P&L went up by 2k, but the maintenance margin simultaneously increased by 7k. I only trade stocks, btw, not options.

My best guess is that sometimes IB increases margin requirements for certain names in real-time, based on volatility, or whatever.

Relatedly, I noticed that IB's portfolio margin simulator usually shows better excess liquidity than the regular margin account. Maybe portfolio margin is worth considering if your account value is sufficient.
More...
The volatility is changing the value of your short options reducing excess liquidity
 
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Dear xxxx,

This is a portfolio margin account and the margin requirements can and will change depending on the changes to the risk of holding the positions in the account. IBKR receives new margin requirements from the OCC every evening. Do you have a specific questions about a date or margin requirement for a specific position?

Regards,

Tom S.


Got this response from IB
 
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