People's input noted, a couple of good observations, several not-so-good points. All I know is IB said they would respond, and haven't yet. They are capable of responding in public or in private forum, and if/ when they issue a response that makes sense and is reasonable (even without money), the issue is over.
If so, perhaps you could explain why the program liquidated the last out of 200+ positions. Was that because prior liquidations widened the box 200-fold, r because the account value dropped below $20 (assuming a 10-point box)?
I want to be given an opportunity to resolve my margin requirement myself. A heads-up telephone call is all it takes. If that fails then having an experienced dealer liquidate in an orderly and cost effective manner is what I want. And guess whatâ¦. Iâm happy to pay for it ! A decent broker is worth his weight in gold. Personally I canât afford cheap brokers. No I didnât say the âsame amount of timeâ but highlighted the fact that IB could, if they so wished, allow some leeway â 10 minutes / 1 hour / close of business / whatever. In this life you get exactly what you pay for, and if you're happy with what you've paid for then fine. Nuff said.
I believe that you should recheck the margin needed for the American style short boxes. Under the CBOE Margin Manual (see attached) page 34 there is an example for both American and European style short boxes. In this example, only the difference in strikes is needed as margin and not any additional amount.
So basically you don't trust yourself to stay within posted margin requirements, and you are willing to pay extra for someone to keep a friendly eye on you. "Can't afford cheap brokers" is perhaps better translated as "can't trade without supervision," no?
That is correct. CBOE rules assert the minimum, not the maximum. The true cost to close out the position for american option boxes can be greater than the strike difference and a proper risk mgmt approach would require the position holder to have at least as much money as would be required to close the position.
Agreed. The minimum is the difference is strikes, but brokerage firms can charge additional margin if necessary.
Especially since the ask to buy the box back is usually more than difference between the strikes if the box is close to full value. In other words a $10 box might have a bid/ask of $9.50/$10.50 so to close at market it will cost you more than $10 to close since no one can guarantee a fill in between. So if IB is forced to liquidate or close it out, they would have to do so at the market and would require you to pay more than the BOX value. So this cushion covers that scenario I assume.