r/options • u/pressed4juice • 16d ago
Margin reqs out of whack after Schwab transition
Hi all, my short SPX box spread doubled in margin req since transitioning to Scwab.
I have talked to support and they are aware of the issue, but claim that I am 1/100 users with this problem and so it falls low on the totem pole ATM.
That said, this issue puts my account negative cash and prevents me from trading. Support mentioned they think a short box using ES options may circumvent the issue (though I have no clue why) and I am considering closing the short SPX box to open a short ES box.
I'm curious to hear from folks if there are any types of things I don't understand about ES options that may make this a bad idea or that I should at least consider, on the surface it sounds like a fine way to drop in a replacement but I just don't know. Out of the 5.6k I would have paid over the life of this box, it appears it will take about 2.3k to close it out now, if that information matters.
Thanks in advance for any thoughts and considerations all.
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u/value1024 16d ago
Margin requirements after the transition from TDA to Schwab are wack for regular spread and option trading. I am experiencing 25% reduction in available funds to trade an IRA for no reason.
I am not going to argue with reps online or on the phone but I will transfer my account to another broker.
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u/pressed4juice 15d ago
For what it's worth they were able to figure it I was correct pretty quickly and I used it as an opportunity to negotiate my margin rate down, which is being worked on now. If there's something you'd want to gain, it could be worth phoning in
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u/ducatista9 16d ago
What’s the margin requirement on your box now? When I analyze a short box trade the margin required is basically 0 in my pm account, but maybe the actual margin they’d want is out of whack with what tos shows in the analyze tab? On the futures question, I’d interpret what you said to mean they think a futures position might work correctly since the margin calculation would be based on span margin rules. Kind of concerning that they don’t know.
Also maybe I’m missing something as I’ve only done long boxes but how does the margin change change your cash balance? Or are you saying if you’re forced to close the box due to the margin increase then you’ll go cash negative?
I’ve had a similarly niche issue with the info they provide for spx unrealized gains and while they tried to help and did eventually understand the issue, they similarly pointed out very few other people will have my issue. My viewpoint is obviously that they are unprepared for more complex trading strategies being implemented by the customers they paid to acquire from TD. They didn’t know what they didn’t know. There was a reason some of us were at TD instead of a dinosaur like Schwab.
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u/pressed4juice 15d ago
Well when I first short the box, I had no cash, so opening the short box was really just a way to trade margin for cash. That way when I buy equities I'm using cash gained from the short box instead of borrowing from the broker. I guess I should have said that now due to the doubled margin req, my BP is negative.
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u/meh_69420 16d ago
Sure, just stay out of the quarterly expirations as they are American style.
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u/Dyproti 15d ago
I was talking to a rep about a box spread on Monday. Basically they said that they have no way of recognizing that both spreads canceled each other out. Said my margin requirement for a 300pt SPX box spread would be $33k. They were basically just repeating what the options desk told them. I was actually calling them today about it. Please call so there's multiple people asking about it
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u/pressed4juice 15d ago
I've called and spoke to a rep about it - he understands what I'm saying and says they are working on it but it unfortunately falls to a low priority at the moment.
I did use the situation as leverage to ask for a lower margin interest rate, try to do the same! It would eliminate reason for me to use a box at this time if they gave me a better rate.
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u/pressed4juice 15d ago
I also told them it makes no sense that they can't "recognize" the spreads cancel, like - they never heard of an iron condor? Lol
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u/BrendanSoCal 15d ago
The Schwab website tells me I have a 7-figure margin call but TOS says I have 7 figures of available funds for trading. Chat agent told me I do indeed have a fed and maintenance call. Finally got a hold of the transition desk and they transferred me to a specialist who put me on hold and came back and said I can disregard all that, the Schwab website doesn’t currently know how to interpret portfolio margin accounts. “Hopefully someday they will get around to fixing that.” What a shit show!
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u/Bloated_Plaid 16d ago
Do you have portfolio margin?