Spread Question using Interactive Brokers

Discussion in 'Options' started by dojistar, Sep 1, 2002.

  1. dojistar


    This is a question for traders who trade with IB,If I place a spead trade with IB when I open an account and do the following trade would my max risk be worked out to be unlimited on selling the SEPT02 CALL,replys appeciated.

    BUY QQQ JAN04 CALL@$3.70
    SELL QQQ SEPT02 22 CALL@$2.70
    for a debit of $1.00
  2. for margin purposes, you have to have the cash to buy the front month and then the margin to sell the deferred month...So yes, that is treated the same as a naked option position...Obviously once the Sept expiration goes out, you would be naked January in any effect...
  3. oops I misread that...you are short the front month long the deferred month...Good question, you can try to simulate that on the platform...If you right mouse click when you have an order selected it will calculate margin for the position
  4. dojistar


    Thanks Vulture
  5. what strike is the jan 2004 call you want to buy? if it is higher than 22 then you need N-22 for margin. e.g. N=25 you need $300 per contract for margin. if the jan 2004 call strike is 22 or below, then there is no margin requirement other than the initial debit.

    you can easily figure this out.. if you are long a 20 and short a 22, and the 22 gets exercised against you, exercise the 20 and give them the stock, and keep the $2 profit.

    if you are long a 25 and the 22 gets exercised against you, you can always exercise the 25, deliver the stock and your loss is limited to 3.

  6. dojistar


    I made a mistake in the original post by not adding the strike in the JAN04 Option,thanks for the replys