These new amendments SUCK!!!

[Nate N2M]

these new rules suck!!!
all i trade is BWB or Ratio spreads, doing pretty well and now these new rules come up and the beautiful benifit of the margin req. ( difference between the credit spread distance and the debit spread distance) is gone.
Now I get a margin calls when the price is 50pts out of the money!!!

TOS calls me and lets me know what is going on, first im fuming because i know im nowhere near my itm strike as well as the market is moving with the volatility of an earthworm.. so i was surprised to say the least.

This really doesn't chage much except i can't do as many contracts as i was before..

This really sucks

And to boot.. the only option strategy play that is allowed under these new rules is a buy-write.. WHAT!
or if you have 125k in ur trading account...

anyone wanna led me 100k????

[MatthewHaley]

Nate,

How do we read the attachment?

Matt

[Nate N2M]

Originally Posted by MatthewHaley

Nate,

How do we read the attachment?

Matt

http://www.optionsclearing.com/compo...Supplement.pdf

[MatthewHaley]

Nate,

Maybe I am the only one not fully understanding the issue. What happened, what changed, and what were you trading?

Matt

[Nate N2M]

Before this change the margin tos charged me was less

Example
BWB was buy 1 570, sell 2 550 and buy 1 500, so my margin was the difference between 550 and 500 (50 pt difference) minus the difference between the 570 and 550 (20pt difference). So I'd have a total risk of 30pts per spread.

Regular margin was $3000 per spread

Now they don't look at the position as a whole they will look only at the credit spread and charge me the full $5000 margin!!

So now instead of using 15k and doing 5 contracts, I can only do 3 contracts!!

this position is hedged a bit, i would gain 2000 on my debit spread and lose 5000 on my credit spread if everything went bad.. net -3000

After thinking about this for a while and talking to some other traders, i may start doing the 132 flies the dynamics are a little different but nothing i can't learn..

With accounts less than 125k they will look at margin trade by trade, no longer overall risk!

Nate

[MatthewHaley]

Got it. I'm surprised I haven't heard this uproar from others.

Matt

[Paulsei]

I am very surprised that you were only charged the difference between the two sides. My experience for several years has been that I would be charged full margin on the 50 spread. Maybe you should request info from TOS about current vs. past practices.

[Nate N2M]

ya Paulsei i was told that i was getting spoiled.. as far as i know tos was the only brokerage allowing this type of margin calculation, one of the main reasons i opened an account with them.

So now i'm being charged margin with the masses..

[awtrader]

Can you explain what text (where) in the pdf is specifying this margin change? As far as I can see the buy-write limitation only applies to "strategy-based" index options. I don't really know what those products are. With what products are you trading the BWBs?

As far as I can tell, TOS still margins skewed fly/BWB positions in standard equities in the way they always did, as a fly (zero margin) plus a vertical (spread diff margin).

The new rule that has affected me, is increasing margin for double and triple leveraged ETFs.

[Nate N2M]

Originally Posted by awtrader

Can you explain what text (where) in the pdf is specifying this margin change? As far as I can see the buy-write limitation only applies to "strategy-based" index options. I don't really know what those products are. With what products are you trading the BWBs?

As far as I can tell, TOS still margins skewed fly/BWB positions in standard equities in the way they always did, as a fly (zero margin) plus a vertical (spread diff margin).

The new rule that has affected me, is increasing margin for double and triple leveraged ETFs.

Please tell me this is tru?!? Cause when i received the call from don i had a 570/550/500 bwb on the rut. margin im used to as well as what tos shows is the difference of the credit spread 50 pts, minus the difference of the debit size 20 pts = 30 of margin or $3000. The rut was at 620 when i got the margin call from don asking me to deposit money to equal 15000 for the 3 contracts of the 550/500 credit spread, if not the clearing corp will liquidate the following tues.. so i closed one contract to comply and bring my requirement down.

After talking to Don, i downloaded and read the disclosure and NO it doesnt' mention specific products but it did reiterate what Don told me and what you aw touched on 'the only strategy that is acceptable is the buy-write'
Bwbs will be looked at separately, debit spread and credit spread, and the margin req will be the whole credit spread..

i honestly hope im wrong and you can shed some light.. but this is what i understood from don

and to boot after closed the contract, i chatted with one of the trade desk reps and he was unsure about the rule as well as the dt software still shows my obp as my total risk not individual risk.. so it will still allow me to trade.. i just don't want to risk another margin call where it may not be in my favour if the clearing corp liquidates my trades.. I'll call tomorrow again to get a full explaination..

Sorry to hear about the double and triples...

******* UPDATE*********

Spoke with another support at the trade desk and was asking if TOS would adjust the OBP calculation to reflect this adjustment.. its actually the clearing corps decision. the ODD did have some ammendments but related to my situation is totally a coincidence.. sorry everyone.. BUT the great news is he told me they will not be changing the calculations as they are fighting this decision as traders know the true risk, and holding the additional margin is unnecessary.. fingers crossed.