UnsettledCash calculation

Q

Quanto

I'm trying to figure out the formula for calculating the UnsettledCash value at broker TDA.

I don't know whether this is documented somewhere, but I suspect it's not,
therefore I try to figure it out the hard way by making screenshots before and after the order,
and then analysing the changes and differences in all the account value numbers...

One would expect that UnsettledCash should be the proceeds from sales.
But it somehow does not sum up. In my CashAcct I made this test trade:

I opened 1 CashSecuredPut contract with Strike=3.50 and Premium=0.40,
but after the order got filled, the UnsettledCash value climbed from $0 to $389.34.

My questions: why so much has been declared as UnsettledCash, and how is it calculated?
Should that not be rather just only $40 per contract, ie. the Credit one receives?

Anybody know the formula for UnsettledCash calculation?

Update:
It seems broker uses the formula "UnsettledCash = (Strike + Premium) * Multiplier - Commission - Fees",
ie. (3.50 + 0.40) * 100 - 0.65 - 0.01 = 389.34.
But is this formula the correct formula at all? I have my doubts... :)

I of course have via a WebTicket also asked the support, but it takes some time. Maybe someone here is faster.
 
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DONT know if its the same as SCHW??
BUT i noticed with SCHW, it did not update as fast as order confirmations.
I'm sure it differs for cash account;
used to be trade +2, meaning trade + 2days, for cash accounts .
SCHW also has a non borrowing -non interest charging margin account , which clears quick that sort of thing.
SCHW almost never makes a math mistake;
except the time the ETF split + they posted 999% gain LOL.BUT by end of day they had corrected that:D:D:caution::caution:
 
Quanto said:
I'm trying to figure out the formula for calculating the UnsettledCash value at broker TDA.

I don't know whether this is documented somewhere, but I suspect it's not,
therefore I try to figure it out the hard way by making screenshots before and after the order,
and then analysing the changes and differences in all the account value numbers...

One would expect that UnsettledCash should be the proceeds from sales.
But it somehow does not sum up. In my CashAcct I made this test trade:

I opened 1 CashSecuredPut contract with Strike=3.50 and Premium=0.40,
but after the order got filled, the UnsettledCash value climbed from $0 to $389.34.

My questions: why so much has been declared as UnsettledCash, and how is it calculated?
Should that not be rather just only $40 per contract, ie. the Credit one receives?

Anybody know the formula for UnsettledCash calculation?

Update:
It seems broker uses the formula "UnsettledCash = (Strike + Premium) * Multiplier - Commission - Fees",
ie. (3.50 + 0.40) * 100 - 0.65 - 0.01 = 389.34.
But is this formula the correct formula at all? I have my doubts... :)

I of course have via a WebTicket also asked the support, but it takes some time. Maybe someone here is faster.
More...

Why is the strike involved in the calc? If the strike was 100 then you'd get (100+.40) * 100 -.65 +.01 = $10,039?

I just sold 3 CSP today on IBKR for .70 and received $207.93 instantly.

I think strike minus the premium is used for margin requirements.
 
wxytrader said:
Why is the strike involved in the calc? If the strike was 100 then you'd get (100+.40) * 100 -.65 +.01 = $10,039?

I just sold 3 CSP today on IBKR for .70 and received $207.93 instantly.

I think strike minus the premium is used for margin requirements.
More...
I have no clue why TDA uses the strike in the formula.
And: I today did another test trade and again the same questionable formula has been applied.
I still wait for an answer from their support.

What is your "Unsettled Cash/Funds/Proceeds" value?
 
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Quanto said:
I have no clue why TDA uses the strike in the formula.
And: I today did another test trade and again the same questionable formula has been applied.
I still wait for an answer from their support.

What is your "Unsettled Cash/Funds/Proceeds" value?
More...
I don't know, it's the first trade I ever put on ibkr but they only charged the three bucks commission. That's it. I also needed to put 83% collateral because my account wasn't diversified for risk lol..but I can get that down to 50% probably if I just add more cash.
 
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wxytrader said:
I just sold 3 CSP today on IBKR for .70 and received $207.93 instantly.
I think strike minus the premium is used for margin requirements.
More...
wxytrader said:
I don't know, it's the first trade I ever put on ibkr but they only charged the three bucks commission. That's it. I also needed to put 83% collateral because my account wasn't diversified for risk lol..but I can get that down to 50% probably if I just add more cash.
More...
What was the strike?
Has the above said "strike minus the premium" been used with your trade?
Or is the 83% a different value?
 
Quanto said:
What was the strike?
Has the above said "strike minus the premium" been used with your trade?
Or is the 83% a different value?
More...


Sold 3 FEB23 24 PUT @ .70
Fees were 2.07
Premium received was 207.93

83% was required capital.
(300 * 24 = 7200 *.83 = 5976)
 
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Quanto said:
I'm trying to figure out the formula for calculating the UnsettledCash value at broker TDA.

I don't know whether this is documented somewhere, but I suspect it's not,
therefore I try to figure it out the hard way by making screenshots before and after the order,
and then analysing the changes and differences in all the account value numbers...

One would expect that UnsettledCash should be the proceeds from sales.
But it somehow does not sum up. In my CashAcct I made this test trade:

I opened 1 CashSecuredPut contract with Strike=3.50 and Premium=0.40,
but after the order got filled, the UnsettledCash value climbed from $0 to $389.34.

My questions: why so much has been declared as UnsettledCash, and how is it calculated?
Should that not be rather just only $40 per contract, ie. the Credit one receives?

Anybody know the formula for UnsettledCash calculation?

Update:
It seems broker uses the formula "UnsettledCash = (Strike + Premium) * Multiplier - Commission - Fees",
ie. (3.50 + 0.40) * 100 - 0.65 - 0.01 = 389.34.
But is this formula the correct formula at all? I have my doubts... :)

I of course have via a WebTicket also asked the support, but it takes some time. Maybe someone here is faster.
More...
Here's the answer from the TDA support:
The calculation for the value $389.34 is coming from the following:

Notational Cash Secured Value of the put = $350
Option Premium = $39.34 ($40-$0.66)
*$0.66 from the option contract and exchange fee*
$350 + $39.34 = $389.34

However, in terms of cost basis you would be correct in stating the cost basis of an assigned short put option
is the strike price minus premium received, i.e. the following

$350 - $39.34 = $310.66 per total of 100 shares

I understand the confusion, but these 2 values are separate because one would be the actual cost basis if assigned
whereas the other is just adding up the unsettled cash value of the put plus the premium in dollar amounts.
More...
The formula for UnsettledCash looks illogical or fishy to me, but one can do nothing but just accepting it,
and knowing the details about it, ie. feeding it into own program logic etc...
IMO that value has to be either $40 or $310 or $350, but not the used $390 (w/o commission + fees).

Happily the UnsettledCash settles the very next morning (T+1),
and I just hope it does not have any other negative "implications or consequences", for example for taxes...
But I'm afraid it shows higher sales... ie. bad for taxes...

Another view to the situation:
"I made a sale of $350 that will be finalized in the future (ie. on the options expiry date),
and received an immediate premium of $40. Does this make a net sale of $350, or $310, or $390 ?"
Can a taxman answer this? :D
That last question I just moved to the Taxes forum.
 
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