Hi Folks, I want to confirm what I believe is true about IBs margin calculation. Say I am long a CFD on a stock at 3:1 leverage. If I also buy a put on the same stock to cut the downside risk so my margin will never drop below the maintenance margin will IB calculate the margin I have on the option unrealized and the CFD? I.e I can never be liquidated?
hi from what i know, you can't reduce your margin risk in CFD with put options...only shares and put options work...
There are many examples on this forum of people who use a specific strategy to reduce their risk but found that IB does not apply the same way of thinking in their margin calculation. It seems that IB does not follow (or tries to understand) the trading strategy of the customer and simply adds the margin requirements for each of the individual positions. In your case this would most likely result in a margin requirement of the CFD, plus the margin requirement of the put option.
Thanks for the replies. There is no margin requirement when you buy options, not sure you understand the question. So you can't really hedge using IB? I find that hard to believe. Anyone else give a more definitive answer?