Portfolio margining - what brokers?

Discussion in 'Retail Brokers' started by HattieTheWitch, Mar 19, 2010.

  1. I'm not sure if this is the right place for this thread, but the posters here seem to be very in-tune with brokerage firms, so here goes...

    I just became acquainted with the term "portfolio margining" a couple of days ago.

    My broker (Schwab) does not allow it, and I'm not sure if E-trade does. Is anyone aware of firms who allow you to use it?

    The reason I ask the question is because I stumbled across a stock, CTIC, which I could short sell @ $1.04, sell the $1 put for $.40, and buy the $1 call for $.30 - netting $.14 - IF Schwab had portfolio margining.

    It would have been a nearly risk-free trade - with the exception being if the stock had risen, or was anticipated to rise, after close of business on expiry day - when I could not have exercised the long calls.

    Schwab would have instead held out margin requirements on everything, instead of (as I understand portfolio margining does) recognizing that I was almost fully protected from unlimited movements both up and down.

    Thanks for any and all input.
  2. just21


  3. Thanks for the tip!
  4. the .14 is probably because the underlying is hard to borrow, or there is some kind of dividend declared. make sure of your costs on the short before you put this trade on.
  5. In this particular case, it's probably because the stock is hard to borrow.

    I could not put it on for that reason, and because the margin requirements would have been enormous.