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Would really like to know difference in Buying Power Effect. On SPX option 200 points OOM (3470 with underlying at 3670) shows -53k on TD Ameritrade. Is IB better?
Help please.
@navypack -53K BP is for Reg-T margin account. It should be half in the Portfolio Margin.
I don't know about the IB but I assume it should be the same for Reg-T margin accounts. I wonder if it is lower for PM account.
I trade anywhere from 3-8DTE,
Based on my backtest results on SPX, more than 5DTE have a huge drawdown and not as profitable as <= 5DTE.
However, I did back test with -0.05 Delta naked put. It can try -0.02 Delta as well to see if it can be as profitable as <=5 DTE.
I assume you do more NDX because of high IV and more premium there. But the risk is also higher.
@sepidpooy I agree with you about SPX more than 5DTE. When I trade SPX 95% of the time it is 2-3 DTE. NDX definitely is more volatile, but I've found the premium to be worth it, when going to lower deltas.
@navypack The spreads are big, but you often can get quickly filled a little less than halfway between the bid and ask. It depends on the day though, during times of low and dropping IV you will get filled close to the bid. Despite this variation I've found the NDX premiums to be worth it on most days (but not today Dec 14)