Wow, we’ve got living legend on ET Rick, thanks, I’ve seen several of your responses about portfolio margin and appreciate those, but I just can’t reconcile them with my own portfolio margin accounts, therefore trying to gather whatever info I can from other people. I’ve looked at a few live and demo PM accounts at IB and TDA, and they not only seem to provide different base margin/bp (between IB and TDA) but also the bp/margin use varies based on our positions, differently at different brokers. Some brokers like TastyTrade totally screw up margin calculations, for example when legging-into spreads (Tasty wouldn’t recognize those as spreads) and admitted to bugs in margin calculation they’re yet to fix. TDA and IB are better at margin calculation and assessing total portfolio risk, but differ between each other, and possibly even between customers. You may see $x available margin and simply use it as you please, but there may be underlying margin calculation based on your existing positions, and possibly other factors (account size?). Overall IB seems to give me better margin than TDA but still not enough to sell too many naked options. On another hand, someone on FB showed me their TDA account where selling some naked equity options used less buying power than at IB. Those differences will continue bugging me because I can’t trade professionally without understanding all factors that contribute to and account for those differences. I’m even thinking about closing all my positions at IB and moving to TDA just to check whether a larger PM account size would matter, but that would be a lot of trouble. Thus for now I’m trying to find out if anyone with TDA account could explain why/when/how you guys may end up with better margin than at IB. Though I’m also aware that you’re doing some financial engineering and sometimes buy a few 5-cent options to offset the sold ones. My margin use varies wildly at IB from day to day, even without practical risk, and I’m just looking for ways to master it.
A few hundred if you're lucky; a few mil (and cutting losses early enough) if you're not. Seriously, though? There's no meaningful answer possible. How much could you have made pyramiding WTI from 1998 to 2008? (Caveat on asking me for help with options: much as I wish and strive to, I do not yet make my living from trading - so my opinions in this regard may not be worth the electrons they're written on. Didn't even stay at a Holiday Inn last night. Take all with a large grain of salt, or better yet, a mug of rum. Make mine a Gosling's, or at least a Barcelo Anejo.)
I’m just going to conclude that the answer to my original question lies in Rick’s response “the differences with IB and TD is concentration risk,, yes 10 contracts may be less margin at IB,,but when you start to do size 1000 contracts TD risk profile are more favorable”. There must be more details that I’m not going to pursue at this time, especially as IB openly states that they utilize some proprietary functions in estimating risk, position concentration, and calculating margin, so there is no math function or programming code anywhere online for calculating margin that would match what IB shows. At least I’ve got used to assessing it. Dealing with TDA margin could also need a few months of getting used to, but for now I prefer IB for my trading style and API. And I’ve had discussions with TastyTrade about their margin calculation issues, so I know it’s not a matter of simply adding margin of each position, while calculating portfolio margin may be buggy for smaller brokers. And it even seems that somehow not every broker properly calculates or knows how to calculate portfolio margin. Unless this is done by clearing firms and somehow messed up there as well, or standardized for brokers using specific clearing firm? Robinhood even had issues with cash accounts and supposedly got screwed on someone buying hundreds of box spreads and getting assigned short shares with high interest, on hard to borrow shares. I believe that Robinhood was responsible for related losses by allowing that in a cash account.
i try to stay well away from 3 deviation drops, all within a weeks time frame, and it depends on the stock as well,, these deviations can and do vary from week to week
optionsellers didnt learn their lesson twice before the last blow up,, heres a DUO of NG traders who fell asleep at the wheel, seriously, if you you have a short of NG and hedged with oil,, not a good play ,, in addition heres the skinny,, a 100 thousand ton Cargo ship deployed to Galveston to berth to take on 19 different NG companies product for the first time EVER export out of USA,, someone has to know why this ship is coming to port, it takes time to get that ship to galveston , like no body knew this was happening,,its not like BIIB blasting a FDA approval overnight,,(this is why i never mess with biotechs),, the optionsellers are not traders they are hot shot schmoozers with cooshy offices and flashy cars who take lunch every day, im an in the trenches hardcare trader, i never leave my desk, i dont take lunch, and i look for WOTM crumbs that nobody wants and i hang offers out there on strikes im comfy with on names im very familiar with so people can complete their spreads,, basically providing a service,, any other questions , please feel free to ask , R
BTW, here is how I need to spend $50 today to get $100K extra margin for couple more weeks at IB (due to having many SPX calendars, diagonals and ratio spreads below 2000 strike, with some legs expiring in a few weeks or months):
@Rick Langer An annoying aspect of the Black Swan problem - in fact the central, and largely missed, point -- is that the odds of rare events are simply not computable. We know a lot less about hundred-year floods than five-year floods -- model error swells when it comes to small probabilities. The rarer the event, the less tractable, and the less we know about how frequent its occurrence - yet the rarer the event, the more confidence these "scientists" involved in predicting, modeling, and using PowerPoint in conferences with equations in multicolor background have become. - Nassim Taleb, Antifragile, Page 7