Portfolio Margin

Portfolio Margin uses a risk-based model that determines margin requirements based on historical volatility by valuing a specific portfolio over a range of underlying price and volatility moves.

For decades, margin requirements for securities accounts have been calculated under US Federal Regulation T (Reg T). Reg T margin requirements are calculated from rules-based formulas that require traders to maintain a fixed percentage of the market value of each position as margin collateral and do not take into account the historical risk of a specific portfolio.

This Portfolio Margin risk-based model also takes into consideration hedged positions, which may help reduce the margin requirement for the portfolio.

Portfolio Margin accounts offer these potential benefits to traders who maintain a balanced portfolio of hedged positions:

Lower margin requirements
Increased leverage.

Requirements

To qualify for a Portfolio Margin account, you must maintain a minimum net liquidation value of USD 110,000.
Options trading permissions.
Existing Reg T Margin customers can upgrade to Portfolio Margin in Account Management.

Try PortfolioMargin

In some circumstances, Portfolio Margin can result in a greater margin requirement than Reg T; for example, if your portfolio is overly concentrated or contains positions that have experienced significant historical volatility. Use the Try Portfolio Margin (Try PM) feature in Trader Workstation (TWS) to compare your margin requirements under both Reg T and Portfolio Margin scenarios to determine the optimal result for your portfolio.

Note:

Note that using greater leverage can result in greater losses; the amount you may lose may be greater than your initial investment. Trading on margin is only for sophisticated investors with high risk tolerance. Before using margin, determine whether it is right for your specific financial situation, investment objectives, experience, and risk tolerance.