Can a broker restrict you from closing positions?
- Thread starter bangorsky
- Start date
Bang, how can you disagree with me when you took what I just said and put it into your own words? Simply change the words debits/credits with the word cash and see what you get.
The margin clerks don't care what you hold or how you hold it. They're only interested in cash and cash.
If this were a writing course I'd flunk you for plagiarism. Well, at least we're on the same page when it comes to margin clerks.
Oh by the way, tomcole what are your credentials? Securities Lawyer? CPA? NASD District 7 Director? Or is it like iceman1 says, fish?
So you mean that the margin dept does not seek to close a position which is causing a margin call (or allow the customer to do so himself)? Which regulation do you refer to which says this? It seems to me that there are only two ways to satisfy a call - provide funds or close the position causing the call.
TrendReaction,
Although I do not have your credentials, it doesn't make any sense why would a broke prevent you from closing out the position.
Now, the part where you lose me is where you say that by selling naked puts you're borrowing some else's calls and selling them!?
Why in the world would you borrow the calls to sell the puts? As the other poster noted, options are derivatives, and as other derivative contracts you do not borrow anything from anyone, when a buyer and a seller agree on a price then a new contract is created (obviously, you can have a party closing a position and a party opening a position, but that's beside the point). There's no need to borrow anything. When you sell (write) a put you assume an obligation to buy the stock at the strike, and for this you receive a payment (premium).
So, once again, what the heck borrowed calls have to do with anything here!? Besides, you can't borrow options!? Why would you, when you can just write a new contract!? Derivatives are not restricted by the limited availability, you can have as many new contracts as you want, obviously within exchange's position limits.
FredBloggs
Guest
Quote from MTE:
TrendReaction,
Although I do not have your credentials, it doesn't make any sense why would a broke prevent you from closing out the position.
Now, the part where you lose me is where you say that by selling naked puts you're borrowing some else's calls and selling them!?
Why in the world would you borrow the calls to sell the puts? As the other poster noted, options are derivatives, and as other derivative contracts you do not borrow anything from anyone, when a buyer and a seller agree on a price then a new contract is created (obviously, you can have a party closing a position and a party opening a position, but that's beside the point). There's no need to borrow anything. When you sell (write) a put you assume an obligation to buy the stock at the strike, and for this you receive a payment (premium).
So, once again, what the heck borrowed calls have to do with anything here!? Besides, you can't borrow options!? Why would you, when you can just write a new contract!? Derivatives are not restricted by the limited availability, you can have as many new contracts as you want, obviously within exchange's position limits.
thank you!!
and we dont need fancy names and letters after our name to have a basic grasp of this.
we still have had no answer.
Haha, this thread makes perfect sense to me... as long as I ignore all of TrendReaction's posts!
TR, I'm just ribbin ya
I think you're just too focused on the words credit & debit (which indicate an action), while all that matters is cash (which indicates a position). And yeah, you totally lost me on the "borrowing calls to sell puts" thing.
***update on the situation***
As of yesterday, the margin call is still in effect, but now my broker is allowing me to place BUY TO CLOSE orders. Looks like someone finally read their Options Handbook.
The situation is still far from resolved, though. I still want to be compensated for 3 days of losses, amounting ~$1000. tomcole, following your advice, I looked in to filing complaints, and I found this useful website resource in case any of you ever need it:
http://www.investingonline.org/aio/complaintcenter.html
I predict this is going to get brutal.
TR, I'm just ribbin ya
I think you're just too focused on the words credit & debit (which indicate an action), while all that matters is cash (which indicates a position). And yeah, you totally lost me on the "borrowing calls to sell puts" thing.***update on the situation***
As of yesterday, the margin call is still in effect, but now my broker is allowing me to place BUY TO CLOSE orders. Looks like someone finally read their Options Handbook.
The situation is still far from resolved, though. I still want to be compensated for 3 days of losses, amounting ~$1000. tomcole, following your advice, I looked in to filing complaints, and I found this useful website resource in case any of you ever need it:
http://www.investingonline.org/aio/complaintcenter.html
I predict this is going to get brutal.