Mike Lin
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The linked WSB post alludes to one more obscure risk with IBKR in particular,
Portfolio margin traders can suffer margin calls if you have a bad mark/quote. This is a huge problem at Interactive Brokers...You need to place a GTC close order at a very favorable unrealistic price to always quote your box.
Brief Googling does indicate there's some history of IBKR customer disputes about liquidations triggered by some weird, transient price tick in a thinly-traded contract. I'd like to think that wouldn't happen in SPX of all symbols, but, we ought to imagine sh*t hitting the fan in period of market duress...
I don't fully understand the suggestion in the last sentence. Can somebody explain how keeping an open order to close the combo position is supposed to help? Other ideas?
Here's a thread I found with some interesting information (albeit by anonymous Internet commenters :) It ends up, on page 5, with a suggestion similar to yours -- open a GTC order to add to (not close) your position, at a price that won't execute, but isn't so crazy as to imply a margin violation were your position to be marked there.
Now, I don't see any harm in putting out there an offer to borrow at negative interest; but it's still not obvious to me why this truly addresses the risk. Do we need such orders to backstop each individual leg as well as the combo as a whole? Since the IBKR... (read more)