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IB Margin on Iron Condors

  1. Does anyone trade Iron Condors in IB? Do they margin one side or both?

    I know this question has already been discussed on ET but maybe something has changed since then.

    I sent this question to them and this is what they replied:

    "Although the option margin optimization software is designed to recognize Iron Condors and assess the account the margin requirement for either the put spread or the call spread, there is no guarantee that an Iron Condor position will be recognized in all circumstances. In those circumstances where the Iron Condor is not recognized the account will be assessed higher margin requirements, such as the sum of the margin requirements for the put spread and the call spread."

    This is kind of a vague reply. What are the circumstances when IC is not recognized as such? Does anyone have any hands on experience? Is there anyone from IB (Def?) who can provide a more clear answer?
     
  2. I have found that Thinkorswim is the best broker for the Iron Condor. They seem to understand the concept behind the trade and that you can't lose on both sides. Optionsxoress seeems capable in this departemnt as well, but I still like TOS for condors. Their sotfware allows you to acutally analyze and place condor trades if you wish.
     
  3. IB margins both sides. Yeah it sucks.
     
  4. This is incorrect. IB margins only one side.
     
  5. Steve can you confirm if Canadian customers get margined on both sides? Cause I'm sure getting that.
     
  6. Sorry, everyone apart from Canadian customers get margined on on one side. This is to do with Canadian regulations - I do not know the full details, but as we would have had to do special programming to exclude Canadians, we definitely would have tried
     
  7. I dealt with this a while back.

    I ended up talking to the CBOE regulators.
    They told me that the strikes MUST be equidistant.

    They told me that they couldn't get the SEC and NYSE to agree to wider spreads.

    example: a 40/50 70/80 will not be recognized as an iron condor and will be margined on both sides.
     
  8. Steve,

    Will IB recognize the trade as an Iron Condor if I leg into it or open the two sides at different times?
     
  9. You'd have to talk to them.
    I would imagine that, once you put on the second spread, their system would pair up the entire position and recognize it as a condor.
     
  10. Yes (assuming that's the only positions you have related to that particular underlying security)
     
  11. When will IB provide portfolio-based margin? Are there any account requirements?
     
  12. good question, there are a lot of people waiting for news on this from IB.
     
  13. We can't offer it until the regulators allow it. April might be a good guess.
     
  14. Fimat has it now
     
  15. Can you open a retail account in fimat? I thought they provide service to institutional clients only.
     
  16. Mostly Institutional but there is a retail division.

    Looks like they require $5 mil equity.
     
  17. Steve,

    I occasionally sell a put or a call on an OEX option. I have been shocked by the margin required! Selling a $1.00 put the margin is above $10,000 per each contract sold naked.

    Am I missing something?
     
  18. Imagine that you are selling an option on a 600 stock. A 10% swing in the stock means + or - $6000 loss if you are wrong. Now if you were selling an option on a $60 stock, the loss would only be $600 on a 10% swing not in your favor.

    Its one of those things you just have to face with indicies. If you don't want it to eat your margin, buy an of the money option to make it a vertical. I.e. sell 670 call, but buy a 700 call to hedge. Your margin will only be 3K.
     
  19. thegazelle ,

    I only trade OEX options. And I occasionally want to trade a naked call or a put and have been blown away by the huge margin requirements at IB. DEF do you have any ideas?
     
  20. Try Options Express.....as long as the spreads are equidistant you will only have margin on one side.

    www.optionsxpress.com
     
  21. Wait until 2nd of April when portfolio margining is introduced should go down to near SPAN rates.


    http://elitetrader.com/vb/showthread.php?s=&postid=1358733#post1358733
     
  22. Doesn't matter who you use, they are going to have a huge margin requirement if you are selling OEX options naked. The only way to solve the problem is to buy another option to hedge like I said in my example.