Re: [TheOptionClub.com] New insane margins

 

I also use optionsXpress, when I went to their calculator, their margins requirements are the same, but when added simulated adjustment to create nonequidtant condor, they didn't increase their margin requirement, on the other hand TOS did. Labib --- On Fri, 7/9/10, Bob C <bobc0923@sbcglobal.net> wrote: From: Bob C <bobc0923@sbcglobal.net> Subject: Re: [TheOptionClub.com] New insane margins To: OptionClub@yahoogroups.com Date: Friday, July 9, 2010, 3:06 PM   May I please ask...is this new margin requirement industry wide or just from TOS?  I use Interactive Brokers and don't recall getting any notification of margin changes and as of my just checking their website regarding margin I don't see anything related to this either.  Thank you. From: Labib Imtanes <ldvn@pacbell. net> To: OptionClub@yahoogro ups.com Sent: Thu, July 8, 2010 11:04:07 PM Subject: [TheOptionClub. com] New insane margins     Before you do any adjustment to your position, you better watch the new insane margin requirement. It could change dramatically: Here is an example taken from TOS as of close of today 7/8/210 if I buy 10 contract of the August put condor 107 102 95 90 my cost will be $840 which is my margin requirement and also my maximum loss to the down side or the upside because the legs are equidistant 5 points.             Assuming in future date before expiration I see that the SPY is going down and getting close let's say to 94 or 93. To protect the down side I go ahead and buy 10 contract 91-90 vertical put spread for $350.  By doing that I reduced my maximum risk to the downside to $190 only but I increased my maximum risk to $1190 to the upside. So in the worst case scenario I lose $1190.  By doing this ( buying the vertical spread) I created a non equidistant condor therefore my margin will increase to $5190. It used to be your margin =  your maximum risk. Now your margin requirement could exceed 4 times your maximum risk. So if you trade condors, iron condors, butterflies, check the effect on your margin requirement before you do any adjustment.   Labib Imtanes

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