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I am trying to set up the Interactive Brokers Brokerage Model, with a cash account, but with an Immediate Settlement Model for options (these will be the live trading circumstances). The following code does not work, I run out of buying power on SPY options. Does setting the ImmediateSettlementModel() apply to underlying options? If not, how can I do that?
Changing the account type to MARGIN works, but I'd like it to be as close to Live trading as possible, where it will be a Cash account making Options trades with Immediate Settlement. If I did backtest and deploy to Live with MARGIN setting, would there be any consequence/conflict if the actual live brokerage account runs on Immediate Settlement? Or will the algorithm be able to handle and see immediate settlements?
Thanks!
equity = "SPY"
self.pip_value = 0.01
self.symbol = self.add_equity(equity, Resolution.SECOND, data_normalization_mode=DataNormalizationMode.RAW).symbol
self.set_brokerage_model(BrokerageName.INTERACTIVE_BROKERS_BROKERAGE, AccountType.CASH)
self.security_object = self.securities[equity]
self.security_object.set_settlement_model(ImmediateSettlementModel())
Mia Alissi
In the Interactive Brokers Brokerage Model, when using a cash account, the default settlement model for options is the DelayedSettlementModel. This means that the ImmediateSettlementModel you are trying to apply does not automatically apply to options in a cash account.
To address the issue of running out of buying power on SPY options, you may need to consider the constraints of a cash account, which does not allow for margin trading. If you switch to a margin account, it allows for more flexibility, but it may not reflect the live trading conditions you are aiming for if your live account is a cash account.
If you backtest and deploy with a margin setting, but your live account uses immediate settlement, there could be discrepancies in how trades are executed and settled. The algorithm might not handle immediate settlements as expected because it was not tested under those conditions. Therefore, it is crucial to align your backtesting environment as closely as possible with your live trading conditions to avoid unexpected behavior.
To simulate immediate settlement in a cash account during backtesting, you might need to implement a custom settlement model that mimics the immediate settlement behavior for options. This approach would require additional coding to ensure that your algorithm processes trades in a way that reflects your live trading environment.
Sources: Interactive Brokers uses DelayedSettlementModel for options in cash accounts, Interactive Brokers supports various asset classes including options
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LE
@ Mia Alissi
Does the brokerage model affect the live trading environment at all? Or is it only for backtesting?
LE
The material on this website is provided for informational purposes only and does not constitute an offer to sell, a solicitation to buy, or a recommendation or endorsement for any security or strategy, nor does it constitute an offer to provide investment advisory services by QuantConnect. In addition, the material offers no opinion with respect to the suitability of any security or specific investment. QuantConnect makes no guarantees as to the accuracy or completeness of the views expressed in the website. The views are subject to change, and may have become unreliable for various reasons, including changes in market conditions or economic circumstances. All investments involve risk, including loss of principal. You should consult with an investment professional before making any investment decisions.
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