narrative

Just to update, I've upgraded to a margin account. Still learning and understanding.

Kim - Thanks for the info. I haven't tried trading a calendar or straddle, but I managed to trade the iron condor okay. TDM - Thanks for the taking the time to write! It's definitely clear and well explained, and you make a very good case. I'll give it some thought but you've pretty much persuaded me to switch to a margin account! I appreciate how you shared about your own arrogant/stupid decision, reminds me to keep some perspective.

Thanks, Kim. I am reluctant to open a margin account as I am relatively new to options trading and have this (probably unfounded) fear of ending up owing margin to IB and having to liquidate other investments to pay for those losses. I had thought that with a cash account the maximum I would lose is the account balance, and was okay with missing out on some of the trades (VIX for example) until I felt more comfortable and had a better understanding of the strategies..

Thanks, Kim. I've gotten in touch with them to see what the issue is. TDM - I didn't open a margin account as I had the impression that they need a $100k account balance, and I am just trying this out with a $10k starting amount. I'm also not sure if it relates to my problem, but thanks for chiming in. I'll see what IB says.

Hi, Thanks for running this excellent learning resource. I'm new to this so I apologise if I have missed something obvious. I'm trying to open the SPX September 2015 butterfly #2 trade, and I understand that I will be debited the net cost of the contracts of all the legs combined. In Kim's thread he managed to get a $6 fill, which would be $600 after accounting for the x100 multiplier. However, TWS is telling me I need a margin of 15k+ to maintain this trade, and refuses to let me send the order as I do not have enough cash in my account to maintain the margin. I saw on IB's website that: The margin requirement for this position is (Aggregate call option second lowest exercise price - aggregate call option lowest exercise price). Long option cost is subtracted from cash and short option proceeds are applied to cash. [http://ibkb.interactivebrokers.com/node/603] Am I doing anything wrong or is this expected behaviour. Do I need a margin account to make this trade? Thanks all, Charles