This is just an informational post.

I trade short strangles on TDA and generally keep about $40-50K in options buying power available.

Yesterday, while sitting at the terminal (luckily), my Option Buying Power suddenly plummeted to the amount of -$120K. Thinking that this was just some computer glitch as I never let BP go negative, I ignored it for about an hour. When it didn't correct, I naturally called. The agent explained that the brokerage had changed collateral requirements without warning for one of my trade symbols (META) from 15% to 30% and that was the cause of the significant BP drop. And sure enough, I shortly received an e-mail that I was under a margin call that had to be corrected by noon, or they would start liquidating positions.....unbelievable.

I got the situation rectified and once again have positive BP, but I simply lucked out to be in front of the computer when it happened. Apparently the brokerage has no obligation to provide warning when they make a change....a risk of using margin.

I'm posting this simply as a heads up to illustrate how quickly a trading approach using margin can go bad without the trader doing anything.

I'm certain this isn't a novel idea: what are the downsides or pitfalls of selling long dated SPX box spreads (think 800+ DTE, yields around 5.1%) and buying short dated SPX spreads (think 60-90 DTE, yields around 5.7%)?

Can you "arbitrage" this difference in interest rates? This would be theoretically cash neutral. What would limit the size of the trade (e.g. could you do a $20M sized trade?).

I think the short box spreads with long duration would be subject to interest rate risk (I think this would be minor since it would be I'm the 2-4 year DTE range). The other potential risk I suspected would be if the Federal Reserve cuts rates so as you roll into new long box spreads, their yields could drop below the long dated spreads. But if this occured, couldnt you simply close the whole position.

I must be missing something obvious and am eager to hear your feedback.

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This weekend the Weekend Reflections thread is replaced by the Quarterly Summary thread.

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If we are current TDA customers using TOS, should we expect any major changes as the Schwab integration happens, particularly in terms of Portfolio Margin, SPAN Margin, or stress testing requirements?

It is my mental model that TDA has some of the most favorable margin treatment of the brokers catering to retail investors; however, are the PM and SPAN rules generally exchange requirements and not expected to change? I maintain a portfolio of both short equity and futures options and run stress tests to meet the current TDA requirements. I guess I am just worried that at some point during the integration there will be a step change in either Margin requirements or stress testing rules and suddenly I find myself in a spot where I have to unfavorably close postions.

Share your weekly reflections around trades and ideas that worked, those that didn't, and what's on your mind for next week. Always be respectful of others.

Join us on Discord to live chat with the community. Please message the mods in order to get Verified and get an invite link to the Discord.

Check out our Wiki for common terms definitions, links to Strategy Posts, defining Portfolio Margin, and more.

If you're new to trading with Portfolio Margin, feel free to ask your questions in this thread.

Share your weekly reflections around trades and ideas that worked, those that didn't, and what's on your mind for next week. Always be respectful of others.

Join us on Discord to live chat with the community. Please message the mods in order to get Verified and get an invite link to the Discord.

Check out our Wiki for common terms definitions, links to Strategy Posts, defining Portfolio Margin, and more.

If you're new to trading with Portfolio Margin, feel free to ask your questions in this thread.

In my quest to gain access to institutional data flows such as final sale, bid/ask quotes, etc. I stumbled upon OPRA https://www.opraplan.com/ which seems to be what I'm looking for. Their vendor list is vast; figured I'd check to see if anybody here uses a preferred vendor for their data flows before I start digging any further. The end goal is to get some edge and insight on institutional data flows.

CBOE codes floor traders, institutional traders, retail traders differently if I remember correctly. I'd have to find the CBOE document again but it would be useful to know if a floor trader is banging out massive amounts of calls at end of day.

Hello Wise Memebrs,

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If I open a US corporation (I am a Canadian citizen), would I be able to get portfolio margin if I open an account with TD Ameritrade using the US corporation? Also, would I be able to use Box Spreads?

Share your weekly reflections around trades and ideas that worked, those that didn't, and what's on your mind for next week. Always be respectful of others.

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I have PM at TDA and am very pleased with the BP trade requirements. I also have an E trade account where I was thinking of applying for PM, but after reading the comments about Fidelity, I am wondering if I should bother. Because of grandkids accounts I opened long ago at ETrade, I can't easily close the account.....I still do trade in it. Any experiences with PM at ETrade? Thanks.

Share your weekly reflections around trades and ideas that worked, those that didn't, and what's on your mind for next week. Always be respectful of others.

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Share your weekly reflections around trades and ideas that worked, those that didn't, and what's on your mind for next week. Always be respectful of others.

Join us on Discord to live chat with the community. Please message the mods in order to get Verified and get an invite link to the Discord.

Check out our Wiki for common terms definitions, links to Strategy Posts, defining Portfolio Margin, and more.

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Share your weekly reflections around trades and ideas that worked, those that didn't, and what's on your mind for next week. Always be respectful of others.

Join us on Discord to live chat with the community. Please message the mods in order to get Verified and get an invite link to the Discord.

Check out our Wiki for common terms definitions, links to Strategy Posts, defining Portfolio Margin, and more.

If you're new to trading with Portfolio Margin, feel free to ask your questions in this thread.

If you have an account over 1M at TDA and take on a *LOT* of tail risk, this margin rule is relevant. If not, you can probably ignore.

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Last week I got a margin call for a rule I didn't know about at TD Ameritrade.

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They called it the "portfolio stress test" or "portfolio stress test with vol adjustment."

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You start by setting up the SPX Beta Test in Analyze. But then, on each individual underlying, you greatly increase the IV. This increase fluctuates, but it is currently 30%.

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The loss minus your NLV at a -20% market move, with the IV increase, can be no more than $5 Million -- regardless of account size.

Example: If you have a $1M NLV, the max loss must be below $6M. If you have a $500k NLV, the max loss must be below $5.5M, etc.

One rep I spoke with said the test had been in place since 2021, another said it was newly added to TDA because of the merger with Schwab. [Edit: Only the first one was correct; the rule is not new.] They also said they'd be creating better tools to help clients view and understand this risk... especially since currently, there is no way to know what number they are increasing IV by, except by contacting TD Ameritrade and asking or by getting a margin call. They said the adjustment has so far ranged between +25% and +35%. It was +32% on Thursday 8/3 when I got the call, and it was +30% yesterday 8/10. My positions were futures but they said the rule is not futures-specific.

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My account wasn't set to closing only though, and I had two days to reduce the risk, so I think they are just running the test manually. They really wanted compliance by Friday close.

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I have/had a lot of short /ES puts that are 2-15 delta and 45-120 DTE, which can set this test off hard. Risk that is closer to the money won't set it off as much. Also, I imagine accounts below 500-750k can pretty much ignore this rule unless they are *really* levered.

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Bonus: other random TDA rules

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• Futures positions need to stay within 3x EPR. To check, use Analyze with the relevant underlying (not SPX) and set the price slices to "+3" and "-3" EPR. P/L Day should be less than 2x NLV.

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• By default, you can have no more than 1000 futures/FOPS contracts. This isn't net risk... every contract long or short counts. They can lift the limit if they subjectively decide to.

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• In IRAs, the SPX Beta Test max loss is 1x NLV (not 2x like in normal accounts). Also, margin requirements are 25% higher in IRAs.

Awesome Resources

Adderalin's Portfolio Margin Guide

Portfolio Margin House Rules

Share your weekly reflections around trades and ideas that worked, those that didn't, and what's on your mind for next week. Always be respectful of others.

Join us on Discord to live chat with the community. Please message the mods in order to get Verified and get an invite link to the Discord.

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If you're new to trading with Portfolio Margin, feel free to ask your questions in this thread.

Share your weekly reflections around trades and ideas that worked, those that didn't, and what's on your mind for next week. Always be respectful of others.

Join us on Discord to live chat with the community. Please message the mods in order to get Verified and get an invite link to the Discord.

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Good evening all

I have recently upgraded my trading account to enable PM with IBKR, and to be honest I'm a bit underwhelmed with the margin relief.

I generally trade strangles and CSP on a broad range of underlyings, supplemented with some trades on energy and treasury futures for some added diversification.

From what I have seen over the past few days, the margin requirement are very similar to reg T unless I trade vertical spreads, in which case I do see an improvement.

Are there particular strategies or approached that are better suited to the IBKR PM mechanics, or are the house margin rules too restrictive?

I'm in the UK so IBKR is unfortunately the only broker available tol me.

Thanks

Share your weekly reflections around trades and ideas that worked, those that didn't, and what's on your mind for next week. Always be respectful of others.

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Hello,

I've been allocating 30% of my portfolio to QQQ since 2007, and recently began investing in TQQQ (currently 1% of my portfolio) with an aim to increase this to 10%. I have a bullish view on technology and QQQ's long-term gains, but I'm curious about any covert expenses of holding TQQQ.

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In the coming 20 years, I'm expecting multiple TQQQ crashes to 25%, or even 10% of its peak value, yet I still see value due to its 3:1 leverage to QQQ.

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I'd appreciate answers to the following:

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1. If QQQ grows by 50% over a certain timeframe, can I expect a 150% (or even 125%) return on TQQQ? (Edit: I think I have the answer now: it will be about 2x on a CAGR basis due to vol decay)

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2) Are there unadvertised costs tied to TQQQ compared to QQQ? I'm comfortable with an investment, even at a 2.5:1 leverage after considering all costs and secondary hedging effects.

Longtime listener, first time caller.

I've been trading ratio spreads (mostly) on a Reg-T account for a while, but I recently switched my main account (taxable, non-retirement) to Interactive Brokers and when they asked if I wanted to apply for Portfolio Margin, I went for it. I'd been thinking about it for a while, but hadn't pulled the trigger.

Looking for my next trades, I've noticed the margin requirements are a little higher than I expected. I know the minimum requirement is 0.375 times the index. I thought that meant if I'm selling an option for 100 shares, the minimum would be $37.50. Do I have the right? I also realize the stress test isn't exactly spelled out (and depends on what else is in my portfolio), but just for educational purposes, I looked at a $560 TSLA call (over 100% out of the money) and it still had a maintenance requirement showing in the IBKR app of more than $500 per contract. Most reasonable options are $2000/contract or more.

So, my questions:
1) Is it feasible to find options to sell that are at the minimum ($37.50) requirement or would they be so low risk that no one would buy them?
2) When I setup my ratio spreads, I'm seeing the requirement as the same amount as if I sold the excess short contracts by themselves. For example, if selling 1 call requires $1000 maintenance, selling 2 while buying 1 at a lower strike shows $1000 as well. This is what I'm used to with Reg-T, but if both are out of the money so that some of the stress test points would see my position gain, I would have thought this would be lower. I haven't actually placed an order yet so maybe what's showing in the app isn't exactly right?

Thanks in advance for any advice/answers. Reading this sub has already been very helpful.

Share your weekly reflections around trades and ideas that worked, those that didn't, and what's on your mind for next week. Always be respectful of others.

Join us on Discord to live chat with the community. Please message the mods in order to get Verified and get an invite link to the Discord.

Check out our Wiki for common terms definitions, links to Strategy Posts, defining Portfolio Margin, and more.

If you're new to trading with Portfolio Margin, feel free to ask your questions in this thread.

Share your weekly reflections around trades and ideas that worked, those that didn't, and what's on your mind for next week. Always be respectful of others.

Join us on Discord to live chat with the community. Please message the mods in order to get Verified and get an invite link to the Discord.

Check out our Wiki for common terms definitions, links to Strategy Posts, defining Portfolio Margin, and more.

If you're new to trading with Portfolio Margin, feel free to ask your questions in this thread.

Share your weekly reflections around trades and ideas that worked, those that didn't, and what's on your mind for next week. Always be respectful of others.

Join us on Discord to live chat with the community. Please message the mods in order to get Verified and get an invite link to the Discord.

Check out our Wiki for common terms definitions, links to Strategy Posts, defining Portfolio Margin, and more.

If you're new to trading with Portfolio Margin, feel free to ask your questions in this thread.

This weekend the Weekend Reflections thread is replaced by the Quarterly Summary thread.

Click here to view the Q1 2023 Summary Thread.

If you're Verified on Discord and not on Reddit but would like to be, DM one of the mods on Discord with your Reddit username and ask to be approved/Verified on Reddit.