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TOS PM Margin?

Discussion in 'Online Brokers' started by Trader G, Jul 7, 2016.

  1. Trader G

    Trader G Well-Known Member

    Can anyone help me with the math TOS is using? I will keep it simple and talk in single lot fly terms. I have a 50 wing iron fly in SPX. The credit was 41.10 so that means no matter what I can't lose more than $890 but TOS is saying that if we move 2sd down the margin would bump to $4400? I emailed them and was given the standard 10%/12% margining and call their margin dept tomorrow but I am just curious before I waste all the time tomorrow I am not missing something simple.
    upload_2016-7-7_17-27-1.jpeg
     
  2. Trader G

    Trader G Well-Known Member

    Well in talking with the margin dept. their solution is that "it's broken". I have never seen it this far off before but apparently they know it is an issue (hit or miss apparently).
     
  3. Teddy

    Teddy Well-Known Member

    That might make sense. My simple method of looking at this is to look at it as a strangle.
    If the market drops to 1923, I'd look at the difference between the 2075 (18.0) and 1925 (4.0) puts. Movement would be result in a 14.0 point loss ($1,400). The 2025 put might give you some protection. As for the calls, it will only be the credit you received. The issue is when there is a 2 SD move, the short puts will be pumped up 2,3, and I have seen 7x what you sold it for. It is not only the increase in volatility that affects it but also a large demand for puts.
     
  4. status1

    status1 Well-Known Member

    That makes no sense
    Sure the iv may move around but it should not go below the expiration price
    That's like saying that the T+0 line can go below the wing of the butterfly which I don't see that as a possibility That may happen in a paper trade account but not in a live account
    There was one time I placed a 5 point wide credit spread in the paper trade account and got filled at 5.10
    Basically a free trade so I an sure they are not going to give you free trades in a live account

    The total margin is the 50 point spread for the wings so for 1 contract it should be no more than $5000 That is the max loss on either side. But because you got 41.10 credit you can only loose $890 max on either side no matter how many sd it moves up or down
     
  5. Marcas

    Marcas Well-Known Member

    It is broken. Do you have another, RegT account?

    Hey, Teddy, this is the same thing :)
     
  6. Teddy

    Teddy Well-Known Member

    I suspect that there is more than this butterfly in your portfolio which might be causing this.
     

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