I received an email about this last December and starting in January, TOS changed their margin requirements and sent me several extreme margin calls on profitable open positions. That went on for a few weeks while the company said they were trying to convince FINRA that it was calculating risk improperly. In June, I received another email from TOS stating that FINRA was forcing them to change the way unbalanced spreads margin is calculated as of July 1st. Seems like Jan & July targets at TOS include changing risk calculations to increase account size by sending out margin calls and blaming the feds. Very strange behavior! I also think that if you have portfolio margining (more than $125k in the account) they don't redo the risk calculations.
I have been told by TOS both on the phone and with support chats that FINRA is requiring these changes but I have not received any notice from Options Express where I also have an active account so I'm suspicious.
----- Original Message -----
From: "Labib Imtanes" <ldvn@pacbell.net>
To: OptionClub@yahoogroups.com
Sent: Friday, July 9, 2010 10:48:43 PM
Subject: 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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