Replies to post #22909 on Cycle Trading

[Duma]

There has been some discussion of late about margin needed to made trades. I have never really cared because I don't do that much option trading, but I did some research into IB requirements and what I found was interesting.

First there is a thing called "House Margin" and "Reg T" margin. Reg T stands for Regulatory EOD requirement.

For IB, HM (house margin) is 25% and Ret T is 50%. So they allow twice the margin inter-day as overnight.

With my option for SQ, I paid $3,485 and now control $23,334 worth of stock. According to IB, a long call position requites no margin. I would think they would at least require what the option is worth, but that is what I read. That says I can do an Archegos anytime I want. I could have bought 100 options and no margin was required.

I found a screen that give me HM on over night positions, I will see what it says tonight.

For a naked call (or put), the margin is
20% * underlying price - OTM amount.

So for my naked put:
20% * 233 - (233-205) = 46.6 - 28 = 18.6 *100 = $1860.
Again I will see what IB says tonight.

But if the option is ITM then it really doesn't make sense to me. If the option is ITM then they would only require 20% of the underlying stock price whereas if I owned the stock they would require 50%. Maybe the OTM calculation would turn to a positive number for ITM positions.

I may have this all wrong and maybe this is not even worth our time to discuss. But if you have an input, I would be glad to hear it.