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Interactive brokers cash requirements
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Interactive brokers cash requirements

  #1 (permalink)
Trading Apprentice
Chicago, IL USA
 
Futures Experience: Intermediate
Platform: The freebie interactivebrokers platform
Favorite Futures: Treasury Futures
 
Posts: 10 since Apr 2015
Thanks: 6 given, 0 received

Interactive brokers cash requirements

I just opened up an IB IRA account so I could buy puts on the ten-year treasury. For some crazy reason, once the account was finally able to place a trade, my ~$2,000 purchase order was rejected because it said I must have ~$20,000 in cash on hand.

When I called, IB insisted that this was an exchange requirement, and went into all kinds of explanation about how there is unlimited risk in buying a put on a future because of performance bond requirements. However, the risk department at the CME told me that they must be confusing the risk of selling contracts with that of buying contracts. That's what I had thought as well.

It's also clear as day in the CME options on futures brochure, which says no performance-bond requirements for buying puts. I confronted IB with all of this, and their attitude was basically--well if it's not an exchange rule like we claimed previously--too bad, that's our policy. I asked how they possibly expect to keep futures options customers with this policy, and they had no answer.

So, what gives? Is this new for them? Are they really this clueless?

Apparently I can't reply to my own thread because of permissions for this website, so I'm answering here:

Shane: From what I understand, if I buy the option to open, I'm the one who asks the seller to exercise the option, causing the assignment, not the other way around. Or am I misunderstanding something?

re: the PM I got:


i960 - Thu, 09 Apr 2015 19:29:35 -0400

What they're saying makes zero sense as long options never require performance bond.

Yes, I know. The exchange knows it. I think even they know it from follow-up calls, but they don't appear to care. Two different people at the risk department in the CME suspected the same as I did--that perhaps IB mixed up buying options with selling them? I just don't understand how a major brokerage could be so utterly clueless to do that.

Unless it's subversive: I don't understand why anyone would buy options using IB with a cash on hand requirement like this, assuming other firms don't do the same. The only reason I could think of is that maybe it's in order to drive away customers. A reason they might want to do this in an underhanded fashion is that reportedly they disabling futures options trading without notice about a month ago for an entire week. I can't imagine they didn't put themselves at tremendous financial liability for people who couldn't trade and weren't given time to get out of IB.

I wish I could file an SEC complaint, but the exchange said brokerages can add whatever restrictions they want to a trade, however irrational, as long as they meet the exchanges' minimum restrictions.


Last edited by randomengineer; April 9th, 2015 at 09:38 PM.
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  #2 (permalink)
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  #3 (permalink)
Trading for Profit
new york
 
Futures Experience: Intermediate
Platform: X Trader, Sierra Charts, Multicharts
Broker/Data: AMP/TT, Vision/Rithmic, AMP/CQG
Favorite Futures: CL, NG, gold
 
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If you buy a put, dont you have the risk of being assigned ?
Then you have to be able to buy the actual ten year ?

I may be wrong, but is this a possibility ?

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  #4 (permalink)
Market Wizard
Houston, TX
 
Futures Experience: Advanced
Platform: XTrader
Broker/Data: Advantage Futures
Favorite Futures: Energy
 
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Wonder if this is all related to this...

https://futures.io/brokers-data-feeds/35091-interactive-brokers-not-allowing-futures-trading-iras.html

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  #5 (permalink)
Elite Member
New York, NY
 
Futures Experience: Advanced
Platform: OptionVue
Broker/Data: IB
Favorite Futures: RUT, SPX options
 
Bookworm's Avatar
 
Posts: 157 since Apr 2010
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shanemcdonald28 View Post
If you buy a put, dont you have the risk of being assigned ?
Then you have to be able to buy the actual ten year ?

I may be wrong, but is this a possibility ?

If you buy a put (or call) then you are long the option and YOU have the choice to exercise it. If you sell the option short then you carry the risk of being assigned.

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  #6 (permalink)
Trading for Profit
new york
 
Futures Experience: Intermediate
Platform: X Trader, Sierra Charts, Multicharts
Broker/Data: AMP/TT, Vision/Rithmic, AMP/CQG
Favorite Futures: CL, NG, gold
 
Posts: 355 since Mar 2012
Thanks: 665 given, 569 received

hi

ok, then that is not it.

thanks

shane

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