Portfolio Margin

C2
1

As a trade leader, I am considering running a stock portfolio that would have greater than 2x leverage, which I could do at Interactive Brokers with a portfolio margin account, but would not be allowed under a Reg T margin account. If I do that, will that be allowed on C2, or will C2 disallow additional trades for investors due to the breaching of Reg T margin limits.

The genesis of this question is based on a 2015 post from Matthew Klein in which he stated, “Right now, all stocks and ETFs are treated the same in C2’s simulation of margin: you are allowed to trade with 2:1 leverage (i.e. put up 50% of the purchase price).”

2

Hi, Tarak:

In your personal brokerage account – and in the brokerage accounts of any subscribers to your strategy – you can use whatever margin your broker allows (or your subscribers’ brokers allow). So, sure, at IB you can take advantage of Portfolio Margin.

But at C2 we use only standard, vanilla, 2:1 leverage in the C2 Model Accounts. This is mostly to allow apples-to-apples comparison, and to prevent a leverage arms race.

Again, nothing’s stopping you or your subs from asking for, and using, whatever leverage your broker makes available within your own real-life brokerage accounts.