Well I am not with IB but they reference a page where their users can figure it out. I cant tell how you arrived at the 3.5% but I am guessing you are not taking the correct values into account. You should check what the margin requirement is for simply being 100 options short in a spread 40/40 and see whether that isnt also 2200 EUR.
What is this strategy called?
- Thread starter Tomaz26
- Start date
Well I am not with IB but they reference a page where their users can figure it out. I cant tell how you arrived at the 3.5% but I am guessing you are not taking the correct values into account. You should check what the margin requirement is for simply being 100 options short in a spread 40/40 and see whether that isnt also 2200 EUR.
Oh and its definitely NOT an exchange recognised strategy so the lower margin (if any) is purely a result of your broker being good for you.
I know this is not exchange margin or strategy but IB. How I arrived at 3.5 %? Well simple. It is the only position I have open at the moment and 2.200 EUR is the margin displayed. I checked it also before opening a position. I found it strange, because usually for other similar strategies it was 10 times higher.. But I do remember IB sent an email a few weeks ago that they will run new algorithm.. I was notified about it because I was paying overexposure fee and the wrote that when new algo comes I will not pay anything.. So maybe this is it..
You make my point. The margin is just what you would have on a spread, you should calculate on the basis of just the spread - it would be the same.
Selling premium and hoping the market doesn't move isn't a "strategy."
Really? I am doing very well with it, thanks.. But then again, do you even trade?.... Oh and btw, I cannot find where I mentioned that I trade strategy, where market is supposed to stand still. Can you maybe point me to the right direction smartass? I could care less is market moves either up or down. It moves up, I gain on lower wing, it goes down, I gain on upper wing, until it expires and I gain on both.. Whats not to like about my strategy...
Well is that any different from other strategies? I am betting here that crude will stay within 40 and 80 in next 1-2 months. I am 3 months out and plan to close it in 30-60 days. So yeah sure, crude can tumble to 20 tomorrow and I am screwed. But so are people long CL futures, so are people long XOP ETF, so are people long XOM stock to name a few out of thousands.. But for me it seems far easier to guess where crude is with 99 % probability NOT going to be in next 1-2 months than to where it IS going to be tomorrow, after 2 weeks or after 1 month..
Besides I DO NOT plan to hold it until CL breaches my strikes.. Why would I do that. Nor to I plan to allow it to come near enough to put me in danger with sudden very big daily move. That is why "rescue" strategies are for and with 3.5 % margin use, I can do plenty.. Go wider with more options, buy more time, etc etc..