I misread it. your are right. the max loss is 1,000. I am surprised IB would get that calc wrong - normally for reg-t they have algos to pair the options and stocks to their most optimal margin configuration.
When I put on a simulated position, it shows the margin requirement as such. Again, I have portfolio margin, and it looks at +/- % distance from current price to determine margin requirement. With reg-t in ToS, I am not sure what the margin requirement is. You can call them - their customer service is good.
I trade BWBs on IB all the time. The margin used is the max risk which is the difference between the widths.
I don't know why they don't change this it makes not sense for them and for me. I trade less because my margin is eaten up for no reason.
Agreed. (And in this case, that is the $1,000 uncovered exposure). As well, 1) the other side of the market can be written w/o (net) margin impact, and 2) margin will be allocated "afresh" for each expiry. Thus, write a 95/80/70 put-side bwb for Sep09, and you can write another, call-side bwb at 10/15/25 without margin impact, but If you write that 10/15/25 bwb instead for Sep15, and you will see a new $margin allocation. For myself, I determine how many $5 "slots" of margin I wish to allocate for any given expiry, and keep strict track of what is allocated, and *what balance* I maintain, of margin consumption, top and bottom.