Direct access options broker

[bulldozer]

Bull, I know you're trolling, you know you're trolling, now troll off!
😎 😆 🙁 😕 🙄 :cheesy: 🙁 😀 😛 😉 😈 😱 :- 😈 :| 😡 🙂

Def: seriously mate, just ignore him.

edited to add . . . "If i had 100 contracts short puts on fts index on the week of London bombings and positions became on margin call on 7/7 and closing 10 contracts would bring account OUT of margin-call . . . " . . . er, is this possible? Closing the positions out (ie buying them to close) is going to mean funds coming out of your account. Since, unless they are deep in the money Euro puts when cost of carry > div yield, they should be trading at at least intrinsic value. Stll going to leave him with a margin call. Anyway, not that I'm bothered . . .

========================================================================

Def,
Youve got your facts all wrong! It would have been quicker for you to answer the question head on! YES to the 10 contracts or YES/NO to the 100 contracts! 😎 and remove ALL doubt! Instead you have chosen a politician way to reply!! And as a result you have caused many/or few people to doubt your margin rule. So i asume you want all viewers to believe that your answer is 10 contracts and NOT 100 contracts. 😆

What about Dashing Blade error [post 30 ] on closing 10 contracts! How come you have failled to point out his error?? and instead you let him believe he was correct in his assumptions with all your laughs/jokes?? 🙄 😆

Bull

 

[bulldozer]

IB MARGIN RULES AND OTHER RULES:

Dear viewers,
plz notice that it does NOT say SOME or FEW contracts or what ever amount is necessary! it just says liquidate POSITIONS [WITH AN S ]. 🙁 PLURAL MORE THAN ONE!]

IB Margin Overview


IB calculates initial margin requirements at the time of each trade, maintenance margin requirements on a real-time basis, and Reg T margin at the end of each day, and WILL LIQUIDATE POSITIONS on a real-time basis if there is a margin deficiency. Real-time margining allows IB to maintain low commissions because IB does not have to spread the cost of credit losses to customers like other non-automated brokers.

All of the calculations below as well as other real-time account statistics can be found in the TWS account window. For a detailed description of the account window and its underlying calculations, see the TWS User's Guide.

It should be noted that all liquidation are subject to the normal commission schedule. Advisor clients will not be subject to advisor fees for any liquidating transaction.

New Position Margin Calculations

Upon submission of an order request, a check is made against real-time available funds. If available funds including the order request >=0 the order is submitted, if it is negative the order is rejected. The following calculations are used to determine available funds:

Securities available funds = Securities equity with loan value - Securities initial margin requirement.

Commodities available funds = Commodities net liquidation value - Commodities initial margin requirement

In addition, you are required to have a minimum of $2,000 or USD equivalent of securities equity with loan value or commodities net liquidation value to open a new position.

Maintenance Margin Calculations

On a real-time basis, excess liquidity is checked to ensure that it's >=0, if it is negative the account is subject to liquidation on a real-time basis. The following calculations are used to determine excess liquidity:

Securities excess liquidity = Securities equity with loan value - Securities maintenance margin requirements

Commodities excess liquidity = Commodities net liquidation value - Commodities maintenance margin requirements

Reg T End of Day Margin Calculations

At the end of each US trading day (15:50-16:00 ET), a Special Memorandum Account (SMA) is checked to ensure that it's > =0, if it is negative the account is subject to liquidation. In addition, no cash withdrawal will be allowed that causes SMA to go negative on a real-time basis. SMA is calculated for all securities (stocks and options) regardless of country of trading as follows:

Special Memorandum Account=Maximum ((Equity with Loan Value - initial margin requirements*), (Prior Day SMA +/- change in day's cash +/- initial margin requirements**))

*
Calculated at the end of the day under US margin rules.
** Calculated at the time of the trade under US margin rules.
Margin Models

Margin requirements are calculated either on a rules basis or a risk basis.

For rule based margin systems, predefined, static calculations are applied to each position or predefined groups of positions (“strategies”). The following instruments are margined using rule based margins:

US stocks, index options, and stock options

Canadian stocks, index options, and stock options

Dutch index and stock options
The calculations for each of these products are described under the Trading/Margin pulldown menu.

For risk based margin systems, exchanges consider the maximum one day risk on all the positions in a complete portfolio, or subportfolio together (for example, a future and all the options delivering that future). The general calculation method is as follows:

Exchange assigns scanning ranges for price movements, volatility shifts, and other risk directions. The ranges are based on observations of historical performance of the underlying instrument.

Every instrument (stock/option/future) is valued over the ranges of price, volatility, etc. The resultant value matrix is distributed to Interactive Brokers on a daily basis.

IB values the (sub)portfolio over the matrix and determines the worst case scenario loss using standard models approved by the exchange.

The margin is calculated as the difference between the current portfolio value and the worst case value
Margin requirements for each underlying are listed on the appropriate exchange site for the contract. A summary of the requirements for the major futures contract requirements as well as links to the exchange sites is available on our Futures Margin Requirements page.

Restriction on Leverage

There is a real-time check on overall position leverage, as follows: The Gross Position Value cannot be more than 50 times the Adjusted Net Liquidation Value. Alternatively, this can be expressed as:

2% securities gross position value > Net liquidation value - Futures option value
Liquidations may occur if the Gross Position Value exceeds more than 50 times the liquidation value.

Universal Account

Although the Universal AccountSM should be viewed as a single account for trading and account monitoring purposes, for regulatory and segregation purposes, there exists a separate securities and commodities account. If there is a margin deficit in either your securities or commodities account, cash will be immediately transferred to protect the margin deficit. At the end of each day, any excess cash in your commodities account will be swept to your securities account.

Margin What Ifs

Margin "What Ifs" may be tested through the TWS Demo or by creating an order and choosing Check Margin under the Orders menu before you transmit an order.

 

[Directional]

dozer,

why are you going on about this? does anyone really care?

 

[bulldozer]

dozer,

why are you going on about this? does anyone really care?

================================================================
Arb,
If you were trading options you would understand!
I'm trying to help people know something thats hugely important when trading options!
It could effect their trading accounts.

Plus because its in my nature to warn people about things they may not know about. 😎

You are convinced that Mr Def is right on liquidation on 10 contracts. But you did not reply if your were 100 % convinced thats what he was saying?! 🙄

We pay Brokers to give us a service ie to open trade and to close trades but NOT to interfere with our trades! there are brokers that will NOT interfere with trades! they give you 1-5 days grace for you to put hedge in place or adjust positions. Do you think its right NOT to make people AWARE of these choices? 🙄 Do you think its right to help a blind man cross the road? i think its right that we should help people to know whats out there.
Also i dont like people that decieve others! I like to expose them for what they are!

Bull

 

[bulldozer]

=================================================================

Peto,

Post 32 🙁

AND you said> "his dodgy broker" Plz elaborate!!! Is this because he allows me to trade short puts? or his rules or what? [post 32 ]

Bull

====================================================================

Peto,

There has been over a 120 viewers in 24 hours so far. 😎

Plz reply to above post! this is now my third reminder. And dont forget that the brokers you use also allows clients to trade the same way i trade [writing put options] 😎
Also did you manage to send a pm to Dashing Blade to correct him of his error? I think you should dont you? or at least your friend Mr Def should! after all he works for IB.

Bull

 

[def]

It's like talking to a wall. I'll try to use very simple language for you - in the rare event that someone actually cares or reads what you write. I'll answer the relevant questions:

1. 10 Contacts would be liquidated in your scenario.
2. If you saw the deficit, you should be able to close positions to avoid the liquidation

some other comments:

1. True clients can contact our help desk who will be able to provide answers to such questions.
2. Clients can also set up alerts via the TWS to pop up, email, SMS, etc when available margin reaches a certain level

I would think we are done not BUT, I'm sure you'll find a way to question or mis-interpret the above information. I'll close by stating that it is fairly interesting that my comments in previous posts talks about a firms financial security and the way IB handles margin calls reduces financial risk to the firm and client base. This has been a strong selling point to a number of institutions moving their funds and positions to IB these past few days.

 

[A Dashing Blade]

edited to add . . . "If i had 100 contracts short puts on fts index on the week of London bombings and positions became on margin call on 7/7 and closing 10 contracts would bring account OUT of margin-call . . . " . . . er, is this possible? Closing the positions out (ie buying them to close) is going to mean funds coming out of your account. Since, unless they are deep in the money Euro puts when cost of carry > div yield, they should be trading at at least intrinsic value. Stll going to leave him with a margin call. Anyway, not that I'm bothered . . .

I was really musing there, it's been 15-odd years since I've been involved in private client business . . . but like I said, not that I'm bothered.

btw Bull, (and I'm genuinely interested in your views on this) you've conspicuously ignored my direct my question to you in my very first post on this thread. To save you finding it (post 11 btw) here it is again.

"As has been pointed out to you before iirc, when you go over margin, it's your broker who is at risk.

Please read the next sentence carefully

Any broker who consistantly allows a client/clients to breach exchange minimum requirements is demonstrating very poor risk control (unlimited downside if the position gets progressively worse and client fails to meet the requirement) and is in danger of being fined (maybe barred?) by the SFA.

Understand? Given your views on risk vs reward, do you think that is a good trade?"

I'd also be interested in the margin requirements as detailed in the small print with your current broker(s), is a 3 day grace period to settle margin requirements included and do they impose more than exchange minimum requirements? What is their legal right wrt margin calls if, for example, a client was uncontactable? I'm not interested in what they do in practise, I'm interested in what they can legally do if they wished?

Pound to a pinch of pigs**t it's going to be the same as any other broker, in that they can effectively close out as they see fit.

 

[bulldozer]

It's like talking to a wall. I'll try to use very simple language for you - in the rare event that someone actually cares or reads what you write. I'll answer the relevant questions:

1. 10 Contacts would be liquidated in your scenario.
2. If you saw the deficit, you should be able to close positions to avoid the liquidation

some other comments:

1. True clients can contact our help desk who will be able to provide answers to such questions.
2. Clients can also set up alerts via the TWS to pop up, email, SMS, etc when available margin reaches a certain level

I would think we are done not BUT, I'm sure you'll find a way to question or mis-interpret the above information. I'll close by stating that it is fairly interesting that my comments in previous posts talks about a firms financial security and the way IB handles margin calls reduces financial risk to the firm and client base. This has been a strong selling point to a number of institutions moving their funds and positions to IB these past few days.

===================================================================

Mr Def,
Thats what i wanted to hear, straight answers to straight questions. 😎 Thank you.!
But your margin rule does not say the same thing? What if i had a mixure of positions ie a few diagonals put spreads, a few calendars put spreads, a few flies or condors, a few naked otm,atm short puts and a few short strangles etc HOW does your firm decide which ones to liquidate? I'm sure many readers are thinking the same questions?. If you cant reply can you plz ask your boss to reply? I feel that its my duty to help people understand margin rules as they are VERY important when trading options!

You forgot my last point!? on correcting Mr Dashing Blade. Is it your duty as an IB employee to correct an error of understanding of one of your clients? 🙄
Perhaps there are other clients of your firm that have the same understanding as Dashing Bld?
Any comments will be most welcome and helpful.

Thanks in advance

Bull
[email protected]

 

[A Dashing Blade]

I'm not client of IB Bull and have never claimed/stated or implied that I was.

Btw, any danger of a reply to my last post?

You point "What if i had a mixure of positions ie a few diagonals put spreads, a few calendars put spreads, a few flies or condors, a few naked otm,atm short puts and a few short strangles etc HOW does your firm decide which ones to liquidate? " is valid

However, in describing your positon in terms on individual stratagies, you apparantly fail to appreciate that legally the overall position would have to be examined. It would be unrealistic to expect the broker to close out on a "per stratagy" basis.

 

[def]

Bull,
Ever hear of SPAN margining. Do I know what will be liquidated? No. However, clients can determine the order of liquidation.

the rest of your comments are nonsense and i won't bother to address. clients can contact our help desk via the proper channels.

 

[bulldozer]

I was really musing there, it's been 15-odd years since I've been involved in private client business . . . but like I said, not that I'm bothered.

btw Bull, (and I'm genuinely interested in your views on this) you've conspicuously ignored my direct my question to you in my very first post on this thread. To save you finding it (post 11 btw) here it is again.

"As has been pointed out to you before iirc, when you go over margin, it's your broker who is at risk.

Please read the next sentence carefully

Any broker who consistantly allows a client/clients to breach exchange minimum requirements is demonstrating very poor risk control (unlimited downside if the position gets progressively worse and client fails to meet the requirement) and is in danger of being fined (maybe barred?) by the SFA.

Understand? Given your views on risk vs reward, do you think that is a good trade?"

I'd also be interested in the margin requirements as detailed in the small print with your current broker(s), is a 3 day grace period to settle margin requirements included and do they impose more than exchange minimum requirements? What is their legal right wrt margin calls if, for example, a client was uncontactable? I'm not interested in what they do in practise, I'm interested in what they can legally do if they wished?

Pound to a pinch of pigs**t it's going to be the same as any other broker, in that they can effectively close out as they see fit.

=============================================================
Das-Bld,
You'v raised a lot of questions. I would like to point out that i'm NOT the type of person to duck any questions or reply like politicians do.

1. Now, do you realise that your point about the 10 contracts are WRONG!? do you want to make any comments on this?

2. How sure are you that the points you mention on FSA rules are as you understand them? You got No1 above wrong!

3. Post the rules and regulations by FSA on board and we will discuse them one by one. Just so we can all see what the points are.

4. I did cover your points on FSA regulations in one of my posts.and also my brokers rules and conditions before being approved as a client.

Lastly cut out the SARCASM and you may GET some more help from me if you wish 😎

Bull

 

[A Dashing Blade]

4. I did cover your points on FSA regulations in one of my posts.and also my brokers rules and conditions before being approved as a client.

Lastly cut out the SARCASM and you may GET some more help from me if you wish 😎

Bull

There was no sarcasm intended, it was a genuine question.
Gotta link to your point 4?

 

[bulldozer]

There was no sarcasm intended, it was a genuine question.
Gotta link to your point 4?

=========================================================================

Dash Bld,
Yes, i can.
Read post 13 and post 44 carefully.!! 😎

Can i just add that if you or any person dont meet their [my brokers] criteria they will not allow you to trade short puts.
If a client has been approved to trade short puts and CANT meet the dead line to cover margin costs [3 days] they would not allow you to trade short puts for a length of time [perhaps 6 months? not sure] If the broker breaks these rules and client fails to meet margin calls within 3 days? the brokers will face/risk being fined. Now to clarify! i have always meet those conditions to clear the margin calls within 3 days.

Some criteria they impose is NOT by the fsa! thats to the discretion of that particular broker!
Most novices get turned away. Why? you will need to ask them why.
My guess would be that they dont want to have rogue traders and send the company bust.
I have assets and they know that i pose a small risk to them and a big risk to my assets. Now, this is their choice of practice/rules and if people dont like them they go elsewhere where the criteria is dffrt!

Would you like to make comments on posts 30, 39, 48, 54, and yet i have not seen ONE ounce of gratitude for my efforts and time to correct you on your errors or in educating you on post 30 and no apologies for the sarcasm in your post too.[30]

Bull
[email protected]

 

[A Dashing Blade]

Ha ha ha ha ha ha ha!

Slippy slippy Bull! But hey, it's Friday afternoon!

As I said, my comment about closing short puts out was the musings of someone who hasn't been involved in private client option business for 15 years., hence my "er, is this possible? " caveat.

Since you took it as an statement of fact (as a result of my innaccurate wording) then let me reassure you that I recognise it to be wrong.

However, I'm afraid that you are still refusing to answer direct questions regarding

a) your views as a trader (rather then a client) on a "finite upside, unlimited downside" trade which is what your broker is effectively taking on when they grant you a 3 day rule.
Recourse to an argument along the lines of "I've signed the paperwork stating that I have X amount of assets" is no argument remember because people sometimes don't tell the truth!

b) whether or not, in the small print of your client agreement letter this 3 day rule actually exists.

Please note that there is no sarcasm intended at all in this post, it is a genuine apology and two genuine questions the first to which I'd genuinely like to hear you view and the second to which I'm expecting like a boolean answer.

 

[bulldozer]

Ha ha ha ha ha ha ha!

Slippy slippy Bull! But hey, it's Friday afternoon!

As I said, my comment about closing short puts out was the musings of someone who hasn't been involved in private client option business for 15 years., hence my "er, is this possible? " caveat.

Since you took it as an statement of fact (as a result of my innaccurate wording) then let me reassure you that I recognise it to be wrong.

However, I'm afraid that you are still refusing to answer direct questions regarding

a) your views as a trader (rather then a client) on a "finite upside, unlimited downside" trade which is what your broker is effectively taking on when they grant you a 3 day rule.
Recourse to an argument along the lines of "I've signed the paperwork stating that I have X amount of assets" is no argument remember because people sometimes don't tell the truth!

b) whether or not, in the small print of your client agreement letter this 3 day rule actually exists.

Please note that there is no sarcasm intended at all in this post, it is a genuine apology and two genuine questions the first to which I'd genuinely like to hear you view and the second to which I'm expecting like a boolean answer.

=============================================================

DB,

I'm not asking you do believe me! You can believe what you want! 😎
I'm stating what the facts are in my particular case wiv my broker. 😎

The moment you put on the FIRST LARGE position! The manager rings you with a series of questions and ask's for some evidence to prove your assets. Normally a fax from your accountant, on reciept of that fax and they are satisfied with your income and assets they then give the green light for the trade to proceed.

As i said b4! If you dont measure up to their criteria you dont get signed up! its that simple! Theres many questions you need to get right b4 your allowed to trade short puts on ftse. Some of the questions are on margins:> How do you reduce margin calls? give at least 2 ways.
Give at least ONE good/best way to hedge short put. How are you able to raise cleared funds to meet margin calls within 3 days and this has to be endorced by accountant and also 3 months banks statements from savings & cheque accounts and letter from bank manager to say how much bridging loan are they prepared to give and if they can do it in 3 days. My assets are valued by the bank valuer and not my choice of valuer. If the bank cant give their undertaking? I would not be allowed to trade shrt puts above a certain level.

Concerning the 3 day rules? Ring any top broker in London and ask them this question:- Is it possible to have 3 days grace on margin-call if my account is above £100K and been with your firm more than 6 months trading actively. and that you know 2 ways to hedge a short put and 2 ways to reduce margin-call by adjusting positions. [You can add the bridging loan avialabilty if he says no.]

plz come back to this forum and tells us the replies. 😎


Bull

[email protected]

 

[A Dashing Blade]

Time to draw a line under this thread.

For the third and final time Bulldozer, is this 3 day rule written into your client agreement letter?
ie is it a legal obligation for your broker to provide you with this facility?

Simple yes or no required. Nothing more, nothing less.

No sarcasm intended, this is a genuine query.

Nice weekend.

 

[bulldozer]

Time to draw a line under this thread.

For the third and final time Bulldozer, is this 3 day rule written into your client agreement letter?
ie is it a legal obligation for your broker to provide you with this facility?

Simple yes or no required. Nothing more, nothing less.

No sarcasm intended, this is a genuine query.

Nice weekend.

================================================================

DB,
Sorry i thought you were initially doubting my word on the three day rule?[on previous post] 😎

1. YES, the 3 day grace rule is written in my agreement! but its NOT available to all clients.

2. Its NOT a legal obligation to give the 3 days grace rule! its at their discretion.

3. The 3 days grace rule only breaches the FSA, If i fail to remove the margin-call within the 3 days of the agreement.

4. They have also offered me a FIVE days grace perriod if i want new agreements drawn up. I did not need it cause i always managed within 3 days. 😎


If your still in doubt? and you fink I'm talking nonsense?

Check out page 10 post 91 on link below:

http://www.trade2win.com/boards/showthread.php?t=15743&page=10&pp=10


Happy weekend to all members and lurkers too! 😎 I hope youv all enjoyed this weeks show? 😆 And also the free advice! I hope my posts has made someone a bit wiser. 😆 😎 I know Dash-blade has learned at least 2 important things this week! 😆 😎

I leave you all [audience] wiv one question over the weekend: 😎 Who is the most POWERFUL man on this planet? 😎 [ clue :cheesy: its NOT GW Bush, or Bin Ladden or Tony B. so who can he BE? :cheesy: 😎
And NO its NOT the Pope either! and its Not the dynamic duo>> Profitaker or Pitscum :cheesy: 😆 or the other dynamic duo Mr Def -Mr Peto And NO he does NOT post on these boards. 😎 Its NOT Bulldozer either.

Bull

[email protected]

 

[gullible]

how could i possibly answer that question w/o knowing your position or capital in the account.

how about I ask you, when the day comes, and it will come if you continue to sell naked puts, and your account blows out and your broker comes knocking on your door, will you pay up?

Thankyou, for sharing your knowledge about selling naked put options. For me personally, your comments are educational and an eye opener.

 

[urep]

================================================================


We pay Brokers to give us a service ie to open trade and to close trades but NOT to interfere with our trades! there are brokers that will NOT interfere with trades! they give you 1-5 days grace for you to put hedge in place or adjust positions. Do you think its right NOT to make people AWARE of these choices?
Bull

Bull:

As a sidebar to your quote above {there are brokers that will NOT interfere with trades! }: Does/can your broker take the other side of your trades? Is this something that you look for when you're chosing a broker?

Thanks for your thoughts,

urep