It seems that for the above trade the Margin Requirement of the broker IB is $20,000.
Such a high margin requirement for such a low-probability trade for reaching ITM is by no means justified
(ie. the underlying is currently trading at 3.50 and the Strike is 9.00, t=1/12, ie. monthly option,
and with a Historical Volatility of say 60, EarningsYield=0 and DividendYield=0 it is very unrealistic as the probability in this case is about 0.0000% (!), as it's 5.4529 stddevs off the current spot that this stock can close at >= Strike, so there is not a single risk for the broker to justify such an astronomically high margin requirement).
For the above trade the margin requirement should be rather near zero, as there is no risk for the broker as the maths proves it clearly.
I would say the margin formula the brokers use are all plain wrong, only favoring themselves,
without paying any attention to the probabilities.
Margin should be calculated according to the same Black-Scholes formula as for calculating the premium and the greeks, especially the Delta, as it says how much the probability is for the trade to end In-The-Money (ITM).
As such, the Margin Requirements are astronomical, and not even the regulatory bodies seem to see the fraud and the rip the brokers are committing to their clients.
I'm complaining.
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