Do long and short futures positions offset each other in terms of margins?

Discussion in 'Commodity Futures' started by Cyrix, Apr 28, 2018.

  1. Cyrix

    Cyrix

    I have a portfolio margin account with IB.
    If I go long $100K face value of CL and short $100K of NG at the same time, does this combined position consume my margin and reduce the buying power of the account?
    Thanks.
     
  2. Robert Morse

    Robert Morse Sponsor

    Cyrix

    Futures trade are not Portfolio Margin eligible. The CME requires SPAN margin and IB sets their own margin higher. You will have to ask IB. SPAN margin has no offsets for symbols that are not the same. CL and NG are not only different, I'm not aware of any correlation. You will need at a min the margin requirement for each future.
     
    Last edited: Apr 28, 2018
    ajacobson likes this.
  3. Ignore face value and ignore portfolio margin. Each contract has a margin requirement of like 5 to 10k usd in cash. If you are long 1 contract you will need say 10k in your account in cash if you also want to get short 1 contract you will need another 10k in cash in your account. That's how it works.
     
    Lou Friedman likes this.
  4. truetype

    truetype

    Futures margins are near zero anyway -- except for single-stock futures.
     
  5. Robert Morse

    Robert Morse Sponsor

    CL Initial $3190 (1,000 barrels)
    NG Initial $605 (2,500 million British thermal units)

    Not near zero but very low for the profit/loss potential.

    I have never watched NG but CL is an excellent trading vehicle with the potential for directional plays, calendars and is always in the news with liquid markets.
     
  6. srinir

    srinir

  7. Robert Morse

    Robert Morse Sponsor

  8. srinir

    srinir

  9. Cyrix

    Cyrix

    Thanks guys.
     
  10. bone

    bone ET Sponsor

    Just informational here, not going to help matters with an IB retail account. My guess is that IB is going to treat each CL and NG position as outright risk. But I like your style, nonetheless ! You are essentially thinking like a relative value HF manager, which is a good thing.

    There is an inter market CME spread margin credit available for CL vs propane, ethane, butane, and ethanol - when executed as a spread. I doubt IB would countenance such a position but the big Chicago direct clearing FCM's that service big commercial spread trading clients certainly do and would.

    http://www.cmegroup.com/trading/ene...tor=CRUDE+OIL&clearingCode=NY-CL&pageNumber=1
     
    #10     May 3, 2018
    Sig likes this.