IB and T + 3 rule

Discussion in 'Options' started by peerless_scarred, Jun 7, 2017.

  1. I've recently started trading covered calls with Interactive Brokers
    and find that I can't use cash from a position I've just closed until
    three days afterwards due to the 'T + 3' rule. Is this the same for
    all the big online brokers? (I'm based in Australia btw.)
  2. Robert Morse

    Robert Morse Sponsor

    Do you have a CASH account?
  3. Yes cash account.
  4. Robert Morse

    Robert Morse Sponsor

    that is why. You need a margin account.
  5. Just one (major) problem Robert - as an Australian (not sure about other countries) IB won't allow me
    to open a margin account. Btw using margin aren't you paying a bunch of money in interest?
  6. Robert Morse

    Robert Morse Sponsor

    I can't be 100% sure, but I'm not aware of any such restriction with us at Wedbush Securities.
    Margin accounts only charge interest if you borrow overnight.
    • Account equity $50,000. you buy $50,000 in stock and hold overnight, no charge
    • Account equity $50,000. you buy $60,000 in stock and hold overnight, you are borrowing $10,000 and will pay interest until you sell out $10,000 worth of stock.
    In a margin account, you would not have to wait for a trade to settle. There are two types of Reg-T margin accounts. One offer up to 2X for DT and overnight and one offer up to 4X for DT and up to 2X overnight. For DT, you need an account of $25,000 or more at all times.
  7. Indoril


    Hi Robert,
    Do you mean that it might be possible for Australians to open a margin account with Lightspeed? I'd be interested if possible. I'm in the same boat as the OP. Interactive Brokers only offer margin accounts to Australians who register as a business.
  8. According to IB Australia they do provide margin accounts:
  9. From IB chat just now:
    "Margin account is available only for Corporate registered in Australia."

    Looks like it might be the way to go - create a company of one person and then
    the margin acct. According to IB I don't have to use margin in the account either.
    #10     Jun 8, 2017