TOS’s Clearing House Changes Margin Requirements

[uptickk]

Anyone else notice that TOS now requires you to have a balanced number of contracts for iron condors?! I talked to someone from the trade desk and he said their clearing house is now following FINRA margin requirements to the T. Basically, if you have 10 – 5 point call spreads (cash settled European) and 5 – 10 point put spreads they will hold 10k for the 5 – 10 point put spread and the 5 – 5 point call spreads but will require an additional 2.5k for the additional reminding 5 – 5 point call spreads. This means you have to post more margin then the position could actually lose!

He said they have been arguing over the margin requirement with their clearing house for a while but it took effect July 1st. He also said if FINRA even looks at it that it wouldn’t be until next year until they would change the policy.

Does anyone know if IB has the same requirements? I am a big fan of TOS but fewer contracts traded equal less profit in my book.

 

[blackjack007]

i don't know about this, but i know that 2 months ago their clearing firm raised portfolio margin risk points for spx and oex options from (-8%, +6%) to (-12%, +10%).

 

[uptickk]

Quote from blackjack007:

i don't know about this, but i know that 2 months ago their clearing firm raised portfolio margin risk points for spx and oex options from (-8%, +6%) to (-12%, +10%).

I trade condors on SPX and OEX. I am guessing that it has to do with TD Ameritrade buying them.

 

[johnnyc]

Quote from uptickk:

Anyone else notice that TOS now requires you to have a balanced number of contracts for iron condors?! I talked to someone from the trade desk and he said their clearing house is now following FINRA margin requirements to the T. Basically, if you have 10 – 5 point call spreads (cash settled European) and 5 – 10 point put spreads they will hold 10k for the 5 – 10 point put spread and the 5 – 5 point call spreads but will require an additional 2.5k for the additional reminding 5 – 5 point call spreads. This means you have to post more margin then the position could actually lose!

He said they have been arguing over the margin requirement with their clearing house for a while but it took effect July 1st. He also said if FINRA even looks at it that it wouldn’t be until next year until they would change the policy.

Does anyone know if IB has the same requirements? I am a big fan of TOS but fewer contracts traded equal less profit in my book.

That sounds correct. I understand what you're saying, but based on how the rule reads you really would only have 5 broken wing iron condors and 5 call spreads. I don't see how they ever could not have charged the requirement you described in a non-portfolio margin account. I'd be surprised if IB held a different requirement on the position. I wouldn't blame TOS for doing this they really don't have the option to do something other than what FINRA rules say that have to even if the rule doesn't make much sense such as in the example you provided.