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IB Charges to Accounts with Worst-Case Loss Exposure
Has anyone received a notice about portfolio stress test from Interactive Brokers?
Based on the average calculated exposure, IB then charges a Risk Factor Exposure Fee per day of exposure. It is not big right now - $1.06 per day - wondering if anyone else has experienced this?
From the bulletin: It's important to note that account holders have the ability to eliminate or reduce this fee through a combination of the following:
Increasing account equity.
A highly concentrated single stock position(s) exposes the account to significant risk exposure. Diversification and hedging may possibly reduce exposure.
Reducing the exposure by repurchasing short positions in options. We have found that short positions in cheap options generate the largest exposures relative to capital. You can use the Risk Navigator to simulate the effects of changes in your portfolio.
Again, the amount above is not being charged at this time. To avoid charges for carrying positions that have a loss far greater in the worst case than the capital of your account, we urge you to examine ways to reduce your exposure prior to the implementation date(s) noted in the table above. Additional information regarding this fee and tools for managing the fee in Knowledge Base articles KB3113 and KB3114
Yes, I have received the notice and actually paid the fee a few times. Usually just a $1.00-$2.00 but it's really quite annoying. You get that notice if you have a lot of overlapping puts, e.g., you have the Wednesday options already way OTM on Tuesday and you already sell your Friday options.
A good reason not to take too much leverage! 😉