IB Margin Requirement Strangeness

Discussion in 'Interactive Brokers' started by PopRocks, Jul 31, 2001.

  1. def

    def Sponsor

    I'm not an expert on US margin but since IB doesn't make margin calls and is fully automated, it will be less lenient than a typical phone broker. In some ways the system handles margin more favorably, in other ways it takes a conservative approach. I believe there is an ongoing project looking at improving option margining but I am not sure of it's priority.
    #11     Jul 31, 2001
  2. trader1


    Were not talking about phone brokers. I've used DATEK and a Realtick brokers and they both handled margin the same exact way. Releasing funds to trade with the day after you took a position, based on maintenance margin of the position held overnight. Then any position taken intra day would be subject to initial margin added to the maintenance margin of the overnight position.
    #12     Jul 31, 2001
  3. ktm


    I agree with def on the option margin statement. The original problem seems to be that the automated system flatly rejected an appropriate trade. A "covered position" where a credit is received AND the strike is equal to or higher than the margin threshhold (basis of the underlying) should ALWAYS be allowed. The result is that a credit is going to be received and retained by the account holder. If the stock goes up, both the broker and account holder are happy. However, if the stock declines and (for example in this case) 100 shares of the underlying were liquidated to meet the automatic margin call at IB, one Call would have to be repurchased (automatically by IB) to prevent a naked position.

    I'm sure this is something IB can structure within their system. Personally, I like to leave a bit of margin room so these situations are less likely to occur.
    #13     Aug 1, 2001