Can IB just increase my Liquid ETFs to 100 margin/no margin?

M

MikeinCanada

Hi I have been trading for few years and live in Canada which is governed by IIROC similar to FINRA and have bet quite big and took out 100k margin loan and sold a few naked PUT options with max loss at 20k so in total 140 k margin and currently my stocks/portfolio are 2 ETF's which are the weed etf HMMJ and Energy ETF OIH, so currently these are given 30% margin in Canada so my question is can IB just increase the margin on these liquid ETF's to 100/no margin? Because if they do that, they will sell all my stocks since it will call a margin call for entire amount since no more 30% margin.

Can someone more experienced with IB please answer this question? I asked IB and they said that it can, but not sure if the person I was chatting with was not sure or saying in error, cause I explained that is not fair, cause that will cause a margin call for entire account and wipe me out when these are ETF's and will rise in the future and pay dividends too which can pay of the margin loan. I am really worried.

So Gross STocks value is 240k , so currently my loan amount is 100k plus 20k put options sold, so lets say if my liquid ETF stocks go to 120k value(crash in half) and I still owe 100k margin loan, and if right then they increase my ETF margin to 100, that will totally wipe me out, please someone more experienced tell me if IB can do that?

Also these ETF's give me dividend too, and I know they can increase individual stocks to 100margin that crash but these are liquid ETF's so wondering, please advice what I can do? I dont mind getting margin calls, its just the FEAR of what if they make these liquid ETF's to 100margin/no margin anymore that will wipe me out totally. Also Im sure there are others who do ETF investing and should also be concerned what if they just increase the margin on those ETFs to 100/no margin anymore. Thank you

Ps. Also I learned for me to never USE margin again, it seemed like not much when I took the margin, my account was at 400k then. but since crashed to 220k right now.
 
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But the point is that this should not be a RISK for you or anyone, cause these are ETF's/index and they pay dividend too. I dont mind NORMAL margin calls where my ETF stocks still have 30percent margin, the only reason I even took margin is cause these are ETF's and WILL NOT GO TO 0 ever. They will recover at some point and my dividends will pay the margin loan.

Does anyone here trading for long time, know if they did this in the 2008 crisis, increase the margin to 100 lets say for ishares ETFs back in 2008?

Or someone from IB please answer, really worried here what IF they increase the margin to 100/no margin on my ETFs and what are the chances of IB doing this knowing these are index ETFs and pay 10 percent yield plus and very liquid as well/high volume
 
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Don't know the rules of IB as they are not my broker. That said, brokers will protect their financial interest at all times. Margin is a loan. So, you are borrowing the broker's monies to trade? Also, why would you sell puts on OIH and HMMJ which are both trending down? Doing so, only increase the probability, you will lose your monies? Adding margin only increases your potential losses?
 
the puts are not the issue its 20k max loss, issue is more the 100k margin loan and if they increase the ETFs to non marginable all of a sudden, anyways can someone from IB or elitetrader trading with IB since 2008 financial crisis please answer the questions if they ever increased the margin on the liquid/high volume Ishares ETFs to 100 margin/non marginable during that crisis? These are not leveraged ETFS but are index ETFs which pay dividends too. And or what are the chances of IB doing this knowing these are index ETFs and pay 10 percent yield plus and very liquid as well/high volume.

Please do not respond if don't know the answer to my questions which is has IB done this in the past increase the margin on liquid ETFS to 100/non marginable which will cause the margin call to be the entire portfolio of the ETFs value right at the bottom. and what are the chances of IB doing this knowing these are index ETFs and pay 10 percent yield plus and very liquid as well/high volume. Can someone from IB please reply. thanks
 
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Pretty sure they structure the agreement form in a sense they work best for IB.
And have u read the million words agreement form? The answer in legality should be in there. I dont read, I just click yes and sign up too.
 
MikeinCanada said:
But the point is that this should not be a RISK for you or anyone, cause these are ETF's/index and they pay dividend too. I dont mind NORMAL margin calls where my ETF stocks still have 30percent margin, the only reason I even took margin is cause these are ETF's and WILL NOT GO TO 0 ever. They will recover at some point and my dividends will pay the margin loan.

Does anyone here trading for long time, know if they did this in the 2008 crisis, increase the margin to 100 lets say for ishares ETFs back in 2008?

Or someone from IB please answer, really worried here what IF they increase the margin to 100/no margin on my ETFs and what are the chances of IB doing this knowing these are index ETFs and pay 10 percent yield plus and very liquid as well/high volume
More...
You sound completely unprepared. How many years did it take Nasdaq to reach '02 highs? IB isn't going to wait for a day.
 
I think i get what Mike is asking. I'll simplify to make it easier to grasp.

Eg.
ETF (currently) :30% margin
Mike has : 100k cash
Mike purchases : 300k worth of ETF

Question - has IB ever changed the 30% ETF margin to higher(for example sake, the ETF's value didn't change) :

Eg
ETF (changed) :100% margin
Mike has : 100k cash
Mike has: 300k worth of ETF
Margin call: 200k
 
qaz exactly thank you, I think many people who do ETF investing are not prepared for this risk as highly unlikely as it is, that's why Im curious if IB has ever done anything like this, where they just change the liquid ETF margin to 100percent/no margin

Also further imagine below that

Eg
ETF (changed) :100% margin
Mike has : actually cash value is -100k (original 100k cash - 200k margin loan)
Mike has: 200k worth of ETF (ETF value went down to 200k)
Margin call: 200k - which means Im totally wiped out!
 
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