Liquidations have nothing to do with profitability. Yes, IB has less EXPOSURE than other brokers. This in turn makes them a more reliable broker and more likely to be there for their customers long term. At the end of the day I don't want option trader's positions to take out my broker any more than he wants to have to suffer from my positions. IB sees to it that EVERYONE is protected...customers and themselves. It's really impossible to protect one without other in this relationship. Honestly, in most cases they are protecting customers from themselves.
Reply to Ktm, Sounds to me that you and Zdreg simply hold that the only way to be a happy IB customer means don't use margin, period. Is that correct?
there are "happy" ib customers who use margin and accept the rules governing margin/maintenance calls. "if you can't take the heat stay out of the kitchen"
Firstly, please see page 26, the posting of Optioncoach, who explains clearly the difference between the box spreads (in my partner's case) versus other situations; in short, there was no practical risk to IB. Secondly, I don't think it is right for you to to have been trying to detract from a discussion of merits due to your personal phobia that IB might raise their rates by justice being done.
In other words, you make extra cushion room, and treat IB as if they're a broker with tight margining policies to avoid auto-liquidation threats, correct?
I use margin. I know where the limits are and of course I stay clear of them. One look on your account window shows you every number you need to know. Go below these numbers and the system starts fixing things for you. I'm not sure how much simpler it could be. IB uses standard "exchange set" margin in most cases and allows for even more flexibility where they feel it's appropriate. They clearly do not have "tight" margining policies. I think that's a big part of your problem here. You keep attempting to assert statements to individuals that are clearly a stretch in order to bring someone/anyone into your personal issue.
(INVITING OTHERS TO COMMENT): There is a serious problem. You hold it is a cardinal rule that "IB be protected". And you hold an appropriate way to achieve that goal is with the current hundreds or thousands of these no-notice panic liquidation per day, while you excuse the occassional improper liquidations (which you don't want IB to pay for, albeit there was no need for the liquidation, and it was done improperly). You also hold it's a great thing that IB has this generous margining. I'm trying to say generous margining is not an advantage if it will then cause the company to panic liquidate hundreds or thousands of accidents per day for their safety!! There is NO advantage of having a car that can reach 100 mph if after you pass the speed limit the wheels fall off. A spade must be called a spade; the car is not designed to drive 100 mph, period. Other brokers achieve the same safety factor merely by making strict margining policies to begin with; there are no panic liquidations and customers can liquidate properly on their own or fund the account quickly. Conclusion: It is totally wrong to hold IB should have "special liberties" at anyone's expense. Call a spade a spade, like other brokers do. IB must take responsibility for wrongful liquidations--and there is no place for silly rationalizations.
In theory you are correct (if held to maturity and no dividends, corporate actions, etc.). However, remember that box spreads do have risk involved.