Margin on option stratgies, help !!

Discussion in 'Options' started by LondonPorpoise, Sep 13, 2019 at 8:28 AM.

  1. Hi there, I'm currently with Interactive Brokers and I want to open some iron condor option trades.
    However the margin IB want is massively in excess of the max loss possible on the trade. They are charging margin as if only one half of the option strategy is placed, e.g. the Put spread.
    Does anyone know of or indeed use another co. who offer a similar service, but actually take into account max loss rather than charging astronomical margin?
    Many thanks
     
  2. traderjo

    traderjo

    could you please post a screen shot of margin effect and I can mimic that on my a/c and see if it matches with yours?
     
    tommcginnis likes this.
  3. Robert Morse

    Robert Morse Sponsor

    Please post the spread details if you want help.
     
    MoreLeverage and tommcginnis like this.
  4. tommcginnis

    tommcginnis

    As a professional platform, TWS has 3-4 different ways to trade any given pattern -- including ICs. As such, it also means there are easily 9-16 different ways to make a small mistake in entry, and screw the entire thing up. (This is when spending the extra commission for a less "Pro"/more consumer-friendly platform can make trading *cheaper.*)

    At any event, as Rob.Morse and traderjo have noted, no one can make an informed reply until you inform on your trade. But a bottom line is, No: IB is not screwing with you.

    (And if we're laying odds, my bet is that you have a put spread on one expiry, and a call spread on another, and you're seeing doubled margin consumption.)
     
    Last edited: Sep 13, 2019 at 9:27 AM
  5. Robert Morse

    Robert Morse Sponsor

    When you create an option spread, you see it as a spread but your clearing broker places it in their systems and pairs off your positions they way they see it. This reg-t option optimizer will determine what margin is and might vary from broker to broker and might not match what you see as max loss. If you want a risk-based margin system, you need to qualify for a PMA.

    With an Iron Condor, even though you can't lose money on both sides, your clearing broker might not provide the credit from the side you win on to offset the other credit spread.
     
  6. I do have a PMA, so that definitely isn't the issue.
     
  7. Thanks for the responses, as soon as the market opens I will show you an example of the strategy I am trying to achieve.
    Thanks again.
     
  8. Robert Morse

    Robert Morse Sponsor

    If you send me detail of a spread, I can run that on the OCC calculator. Some symbols are not PM eligible and some are illiquid or have a higher requirement from volatility, but I can give you an idea of what Wedbush/Lightspeed would offer. My email is below if you want my help.
     
  9. Here's an example of a strangle I tried to put on.
    the maximum loss is about $54k, but the margin is coming out at GBP (my base ccy) 142k which is about $177k

    Any thoughts?
    Thanks.
     
  10. Robert Morse

    Robert Morse Sponsor

    This helps. ETNs like VXX are not PM eligible. I expect if you buy a call and put the requirement should be 100% of that value.