Hi all,
I tried searching FAQs and couldn't find an answer on this.
I have an account with interactive brokers and after placing a trade for a CSP, I receieved a notice asking me to consider adding at least 10% additional margin.
Im not really sure why I got this message as I'm not using margin. I have the funds in my account to cover the contract. I ended up just closing the trade because I wasnt sure if interactive brokers would intervene on my behalf.
I have a few questions...
1. Why am I being asked to add more funds to the account when I'm not using margin and I have enough money to cover being assigned.
2. Can interactive brokers cancel my trade if they feel I dont have enough margin (even though im not using margin).
3. Would it be better switching to a cash account? I'm using this account for options and have no intention of using margin.
Thanks.
UPDATE:
I contacted interactive brokers. They confirmed that I have a cash account but i still need margin.
I did some more digging and it seems it's all based on how much it would cost me to close the trade. For example, if i have $500 excess liquidity (available cash outside earmarked funds for options trade) and it costs $600 to buy to close, my account would be negative by 100. Due to this risk, I could get liquidated despite having an additional 20k in my account earmarked for the contract. The customer service rep wasn't able to explain it like this. They just advised keep an eye on your available cash. Hope this helps someone. Thanks for the responses.