Portfolio Margin? (Need Input)

Discussion in 'General Discussion' started by Boomer34, Dec 28, 2015.

  1. Boomer34

    Boomer34 Well-Known Member

    Hey Trader,

    I am still somewhat new here, but I wanted to get some input on trading these M3-ish strategies with a portfolio margin account vs a standard account. I know the requirements for a pm account, so that is not really what I'm after. I'm more wanting to hear from those using a pm account, and how it affects their trading/returns/risk analysis/etc...

    I know that asking this type of question will produce varying answers based on the type of underlying product being traded...but I'm specifically wondering about an M3 type trade. For comparison sake...what would the difference be if you fully maxed out your pm account vs maxing out your reg account (using the planned capital framework).

    Thanks for any input and other issues to think through...
  2. Andrei

    Andrei Well-Known Member

    I have both PM and Reg-T accounts, I also have a 401K account which does not let you trade any naked calls and allows only cash secured puts. I trade M3/BB/Road Trip strategies and never had any problems in any of my accounts. Even if you bump into some margin requirements restrictions with your trades, there are way to work around them: use weekly calls for M3 instead of monthlies, use spreads, pull in some of your far-away longs, use /TF, /ES futures for emergency hedging (much lower margin requirements). Now, if you are constantly having margin problems, then your trades are probably too big for the account. So PM is nice to have, but not really necessary.

    If you plan to trade any naked options or want to leverage your equities portfolio, PM is the way to go.
  3. David Stewart

    David Stewart Well-Known Member

    The M3 is not a trade that requires PM. Since everything is paid for when you enter the trade there is no reason to even consider it a factor unless I'm missing something here.
  4. Andrei

    Andrei Well-Known Member

    The only time you may have margin problems with M3 is when you are forced into some heavy-duty adjustments and your planned capital is about the same as your account size. But even then there are ways around it.
  5. William Smith

    William Smith Member

    I trade the M3 using "double-size", which is something Locke taught in the APM class. It provides more efficient use of capital. Sometimes when doing this adjustments can cause you do slightly exceed planned capital. I trade in a PM account, so this is never a problem.
  6. Trader G

    Trader G Well-Known Member

    With a PM account, you are able to go in to the weeklies and drastically reduce your margin requirements in M3. This is helpful if you are in two different expiration cycles and you are starting to get closer to the expiration which will expand the margin required since the gamma starts to grow. It also allows you to ramp up the trade to a larger size as mentioned above.

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