Could IB increase margin req in a short put position to above its maximum loss?

Discussion in 'Retail Brokers' started by Daal, Jun 3, 2010.

  1. Daal

    Daal

    Lets say you short 1 put $10 strike, your maximum loss is $1000. Could IB raise your margin req to above that?I asked them that and they said they did not give a direct answer
     
  2. i am guessing they can't adjust house margin requirements for a particular account. if they do the account holder may sue them for frivolously squeezing his balls.
     
  3. So long as minimum regulatory margin requirement is fulfilled, which may vary based on instrument, underlying asset, time of day, holding period, account type, etc, they can do whatever they want. "They" refers to any brokerage, not just IB.
     
  4. Daal

    Daal

    'Please be advised that IB reserves right to increase margin requirement in light of the increased market volatility. Unfortunately whether we will or will not increase the margin requirement to/above the maximum losses amount for short put position cannot be predicted at this time. I hope this helps to clarify.'
     
  5. As long as you have enough to cover the ownership of the stock if it's assigned to you (and this would include having at least $2000 in non-option assets in order to be able to own stock on margin) it seems unlikely the margin reqt for a short put would be raised above the max possible loss. Theoretically, though, any broker can decide to revoke your margin account, in which case you won't be able to hold any options.