I use IB with portfolio margin and have a lot of option positions expiring tomorrow. Most are call ratio spreads that are far OTM (many would require more than a 20% move to go ITM). About half my portfolio will expire tomorrow. Given that my account is down slightly this morning and VIX is up, I was surprised to see my buying power increased by about 4x overnight. How did that happen? Is IB effectively not requiring margin for some short positions that they consider have no chance of ending up ITM by expiration tomorrow? I'm net short about 20 SPX calls expiring tomorrow ranging from 4300 to 4800. No put exposure.
It gave me a heart attack as I thought your Blood Pressure just increased 5X overnight. anyway, all the best to you
Oh, thanks yeah, I meant buying power. I should have spelled it out in the title. Mods, can you change BP to buying power in the title?
I seriously doubt IB would be that generous. It sounds like a bug. If that was the case, people would go to town selling penny options. Or maybe, you should stay quiet.
I've seen that happen frequently. It feels like they have an algorithm measuring the time remaining and distance to the strike and they are handing back margin dollars incrementally.
Yeh, that's what I suspect. I'm short SPX calls expiring today from as low as 4230 to as high as 4780...I would close them if I needed the margin, but I don't so I'll just let them expire worthless. When I look at the margin requirement of the further away SPX options, say 4700+, they only require 10k of margin. The closer one at 4230 requires 20k of margin. So looks like they are discounting the margin requirement of the further away options. I think the PM margining algorithm simulates large swings and assigns margin based on how each position affects your portfolio. However, not sure how they translate that back to the margin for a given position.
The way I test it... is to set up an order closing the position, then right click and run the "check margin" function. I've had naked options close to expiry add almost nothing back by closing them - which means they've already given the margin back.
I checked the same far-away option that I looked at this morning and the margin went from 10k to $900. Granted, this is after the market has closed. I'm already back to around 75% of my max buying power, about what I would expect my buying power to be post expiration, tomorrow morning. So I think they have some function that discounts margin based on distance and how close we are to expiration.