Margining for shorting call options: IB or Thinkorswim (Penson)

Discussion in 'Retail Brokers' started by Option Trader, Dec 20, 2007.

  1. To short 100 out-of-the-money call options with Thinkorswim the buying power effect was about $6k. With IB, the effect was that in increased initial and maintenance margin by 23k--but I have no idea what that means regarding buying power.
    Please advise.
  2. The buying power effect is the additional capital required in your account to open the position. That means, your SMA will be reduced by the same amount.

    If you have no other postions, buying power effect is the required margin for that single position.
  3. My question had to do with IB's initial & maintenace margin effect, i.e. what's the significance of that in layman's terms. When pushing the right mouse, that's what "check the margin" shows you with IB.
    Is the issue to make sure "net liquidation value", or the "current available funds" are greater?
  4. You should look at SMA. If SMA > initial margin, you have sufficient capital to open the position.

    When SMA < 0, you will get a margin call. But IB doesn't have a margin call. Instead, they will liquidate your position to fulfill the margin requirement.
  5. Will a $23k increase in the initial margin requirement cause a $46k decrease in SMA?
  6. Why double? It should cause a decrease of the same amount. I never checked the value though.