I guess in a rush to correct, you missed my correction.
Serious errors found in RegT margin calculation formulas
- Thread starter Quanto
- Start date
I guess in a rush to correct, you missed my correction.
Robert Morse
Sponsor
I'm finding most of this thread confusing. I do not see where the CBOE had it wrong on REG_T Margin and I do not know what you mean by PM requirements outside the USA. PM is an OCC risk based margin system. It is available to foreign accounts on US equities. It is not the same as a foreign broker offer 6x for Day trading.
Yes, but foreign accounts could effectively be exempted from the $110k/$125k requirement. Maybe then formally it's no PM, but if it's effectively the same I would still call it "PM"!
(instead, I assume a US inhabitant having a US based broker cannot be exempted)
Robert Morse
Sponsor
There are no different rules based on where you reside. FINRA has three equity levels for PM. Without going into too much detail, those levels are $100,000, $150,000 and $5mm. Those are regulatory maintenance levels. Brokers ask for more to start. Most online brokers with their own software can offer $100K or more. Brokers like Lightspeed that clear Wedbush, require more than $150K. Larger banks that do not want to monitor day trading margin, require $5mm or more. There is nothing tied to your location. https://www.finra.org/rules-guidance/key-topics/portfolio-margin/faq
what the difference between 150k and 5mm?
Dont't you see the illogic in MarginAccount that requires more than 100% margin?
Even a CashAcct is then cheaper.
Ie. for the said example the requirement for a ShortCall for S=100 is $110 in MarginAcct, but only $100 in CashAcct...
The requirement in a MarginAcct should never be more than S or the requirement for CashAcct (which is S).
Sure, the credit received reduces the net requirement, but that's not the issue.
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Robert Morse
Sponsor
The $150,000 requirement is because the clearing firm does not have a system in place to stop a margin call at the time of entry. The $5mm requirement is because the clearing firm does not have a system in place or does not want one, to monitor day trading margin based on "time and tick". If the customer has a $2mm limit, they can't exceed that at any time during the day. Accounts over $5mm are not required to monitor day trading. They are only required to monitor risk and credit limits.
You're confused because you don't realize you're talking to Fair-Put™ guy, who think all maths, that have been used by everyone forever, is just wrong.
Thus the reason he was trying to redefine Black-Scholes in options. It's all WRONG according to him!