how does IB calculate the margin requirements on options I want to sell a 30$ ES option and it calculate me a 15k initial Margin does it make sense ?
This is what the CME using to determine risk and margin. Your broker can require more but not less. http://www.cmegroup.com/clearing/span-methodology.html Bob
IB uses "The Algorithm". It is never wrong and you may not question it. If you attempt to question it, you will be told that your question will be forwarded to Risk Management to thoughtfully and fully consider your query, however being that your query will question the perfection of The Algorithm, they will quickly respond with "The Algorithm is never wrong and cannot be overridden". In short, don't attempt to calculate it yourself. The Algorithm is what makes the decision, so you need to just accept whatever number it gives you whether it makes logical sense or not.
The problem is that when I have a limited amount of funds and I have a strategy I “like “ to trade with it basically makes it impossible to figure out how much money I’ll need to keep in my account in order not to get a margin call so it sucks
Formerly, a margin calculation algo was posted on the website. It may still be there. But with some of the things that have been posted on ET over the last 2 years, who knows? At any event, the website should be your first stop. But when your reach that asterisk that reads "*IB may on its own volition change margin requirements at any time and without prior warning."....... well then,.......
This is why I would never open an account with IB. I do not like having some unknown algorithm deciding to liquidate a position regardless of risk level just because it found a risk where non exists. How the heck are you supposed to trade if you cannot factor in your risk factor and manage it accordingly?
you cant. The IB Algo could liquidate you at any moment. Even a bug etc.. could make a mistake and you can lose tons of money. I stick to TD and ETFC.