Test your knowledge of new IB margins!
- Thread starter weewilly
- Start date
Hi
Yes, that has happened to me sometimes . But in a Reg T margin account. I thought that in a portfolio margin account might be different.
And I thought that all Brokers had this kind of restriction. I remember I asked to @RobertMorse that question months ago. He told me that Wedbush has what they call a leverage limit (GMV/Equity). It starts at 5.56 but it can be raised to 15X. Then I understood that was the same restriction as IB, but with less leverage, but now I think I misunderstood.
The restriction in IB is gross position value must not exceed Net liquidation value multiplied by 30. And @RobertMorse is talking about Equity.
I don't know if it is the same for other brokers ,but in IB Equity with loan and Net liquidation value are two very differents concepts .
It is easy to have a net liquidation value of 10 and an ELV of 100 , so if the restriction in Wedbush is calculated like Gross position value/Equity with Loan that would be much less restrictive than IB.
It would be good to find the answer and know what happens with other brokers, because it can be a motive to change Broker.
thanks.
Yes, that has happened to me sometimes . But in a Reg T margin account. I thought that in a portfolio margin account might be different.
And I thought that all Brokers had this kind of restriction. I remember I asked to @RobertMorse that question months ago. He told me that Wedbush has what they call a leverage limit (GMV/Equity). It starts at 5.56 but it can be raised to 15X. Then I understood that was the same restriction as IB, but with less leverage, but now I think I misunderstood.
The restriction in IB is gross position value must not exceed Net liquidation value multiplied by 30. And @RobertMorse is talking about Equity.
I don't know if it is the same for other brokers ,but in IB Equity with loan and Net liquidation value are two very differents concepts .
It is easy to have a net liquidation value of 10 and an ELV of 100 , so if the restriction in Wedbush is calculated like Gross position value/Equity with Loan that would be much less restrictive than IB.
It would be good to find the answer and know what happens with other brokers, because it can be a motive to change Broker.
thanks.
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Assuming you have less than 1m in your account, you can see the 30x rule working by opening an order entry panel for 200 Jun 14 SPX 3000/3100/3200 put butterfly @ .05. Fill in the order entry for BUY 200 @ 0.05, then click "advanced" and "check margin". The panel will clearly show the rule disallowing the order even though the cost and risk is $1000, you need 1m+ (i.e. 34m / 30) to own 200 of that butterfly today.