study in iron condor options and margin

O

osho67

I have set up these four following iron condors expiry 20th feb 2014.

1. 1825/1850/1775/1750 margin requirement: 389

2 1850/1875/1750/1725 margin requirement : 599

3. 1875/1900/1725/1700 margin requirement : 654

4. 1900/1925/1700/1675. margin requirement : 596

This is in portfolio margin a/c with IB

I donot understand that as I move to far safer positions , my margin requirement increases. Logically these should decrease . Please explain to me why this happens?

Do exchange want me to take riskier positions?

These are actual figures taken at the opening today.
 
Quote from Maverick74:

As you move closer to the money, the margin is going to increase. If you rolled further out it would decrease.
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This study is in SPX index options. Index at the moment is 1784. As I move far out from index position , the margin increases.
 
Quote from osho67:

This study is in SPX index options. Index at the moment is 1784. As I move far out from index position , the margin increases.
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It can't do both. What is the example you gave above? You show three different positions. Are you showing that you are "adding" to an existing position or are you simply showing each position in isolation but closer to the money?
 
Quote from Maverick74:

It can't do both. What is the example you gave above? You show three different positions. Are you showing that you are "adding" to an existing position or are you simply showing each position in isolation but closer to the money?
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I have shown four positions. These are new positions. This exercise is an example only. My first listed position near to index value The margin is less than 4th position which is much far from the index value and yet margin requirement increases.
 
Quote from osho67:

I have shown four positions. These are new positions. This exercise is an example only. My first listed position near to index value The margin is less than 4th position which is much far from the index value and yet margin requirement increases.
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So let's use a default example here. If I sell a spread that is 20 pts wide for a dollar, I should have greater margin then if I sell that spread 20 pts wide for 5. The reason the margin is less is because you are taking in a bigger credit. The max I can lose on my second spread is 15 pts and the first spread is 19 pts. As you go further out your credit is getting smaller and your max loss is getting larger. If you sold an ATM spread and got 10 pts credit for a 20 pt spread then your max loss is only 10 pts. It should make sense that this spread would have the smallest margin.
 
Quote from Maverick74:

So let's use a default example here. If I sell a spread that is 20 pts wide for a dollar, I should have greater margin then if I sell that spread 20 pts wide for 5. The reason the margin is less is because you are taking in a bigger credit. The max I can lose on my second spread is 15 pts and the first spread is 19 pts. As you go further out your credit is getting smaller and your max loss is getting larger. If you sold an ATM spread and got 10 pts credit for a 20 pt spread then your max loss is only 10 pts. It should make sense that this spread would have the smallest margin.
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Thanksfor explanation.

First position credit is 16.65, 2nd one is 11.75, 3rd is 8.2, and the fourth is 5.62. I never thought credit I receive affects my margin requirement. I am more safe in the 4th position and I pay more margin. Thanks again
 
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