Broken option spread trade , buying power

Discussion in 'Interactive Brokers' started by cpphey, Sep 4, 2019.

  1. cpphey


    Hypothetical question:

    Let's say I trade the following:

    292 Put Sell to Open
    293 Put Buy to Open
    100 option contracts
    0.50 Debit per contract

    Now if I close just the 292 Put Buy to Close , will the platform let me trade 292 Put Sell to Open i.e. same leg again (at a different price) without complaining about "buying power" .

    Since this trade by itself is a short trade but not when you factor in the 293 position I still have on

    I hope it recognizes I have the other position. If not, can I call in the company to do this trade ?
    Last edited: Sep 4, 2019
  2. Robert Morse

    Robert Morse Sponsor

    Yes, it should because the short put is still protected. The other way around would be more difficult. Daytrading the long side would leave you short for a period of time and you would need to have the margin for that.
  3. cpphey


    protected from the long position always being there, right ?

    Are you saying it would be only be possible with margin (or having enough cash in the account) and impossible without those ?
  4. Robert Morse

    Robert Morse Sponsor

    Yes. and you need approval for the short option.
  5. Bum


    Broker will look @ all positions in the account to calculate margin. Doesn't matter if you opened the trades as a pair or separately.

    YES, you can close the "short 292 put" position but your margin requirements will increase since the cost of your trade went from .50/contract to .75/contract ($5,000 to $7,500) if the 292 puts were sold for .25/contract. If you close the "long 293 put" position & hold your "short 292" position, your margin requirements will increase significantly since your "short 292 put" position has no protection.

    You can then re-open the "short 292 put" position again @ any price and your margin requirement will drop again.
    Last edited: Sep 4, 2019
  6. cpphey


    @Bum and @Robert Morse thank you both. I know one such broker which is totally not that smart and who S/W has bugs as well :vomit: