This will happen in the second step. They will sue you. I have however, an insurance which covers legal costs. Talked with them about that. So, that is not the issue. If you cant pay, which is my case, you will have a long process with liquidator etc. But in the end, they will still lose some money, if a person cant pay.
Complaint - GME liquidation problem which resulted in huge negative liquidation value
- Thread starter Baldur01
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I want to be clear that I know how much these things hurt. Be strong... you'll pull out of this.
You have to take the loss, take the lesson, and move on. You have no legal recourse. The problem is that it was a wild, reckless trade. To sell naked calls into a stock being squeezed like this is tantamount to putting all your money on one number in Roulette. You'll get no sympathy from the regulators... you were contributing to the (arguable) manipulation.
The fundamental problem here is that you didn't cover your calls. You didn't hedge! Naked calls/puts are extremely dangerous! Honestly I'm surprised that your broker even let you do this, and that the trade made it past automated risk checks.
I've worked in this field for a long time. If I saw one of my guys making this trade I think I would physically throw them against a wall, get in their face, and tell them to either hedge it or close out IMMEDIATELY!
I read stuff like this and start thinking that I should be doing some mentoring. I just don't see myself smart enough to mentor... but maybe I could save some people from this kind of thing.
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That's true. Thank you for the comment. Obviously, I will take the loss and take responsibility for the fuck-up. However, the broker is to blame for certain points and they know it as well, hence a certain loss can be cut to a degree. Otherwise, they could just write any number, liquidate all your positions and blame it on market volatility, technical problems, etc.
Understood, but you are responsible for your unlimited risk--and signed off (when opening the account) on absolving IBKR of any risk due to system failures. You could have called into the trade desk any time within those four hours... or at least made the attempt.
I tried some times to call during the 4 hours. Try to get to them on a normal day. Imagine getting to them on exactly that day. Had no luck.
No. It was the trade, and ultimately it was YOU. Take accountability for your positions.
I feel very strongly about this. I will not allow you to point a finger at your broker. You need to understand this point, or you'll get burned again.
You left yourself exposed. You can't do this in trading! Perhaps if you're paying $1M/month for a colo at the Nasdaq, them (maybe!) you'll get your execution times and prices. A guy like you must learn how to structure your trades to remove risk like this. YOU must learn to hedge!
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this is what I was mentioning to the GME fools trading options, the bid/ask volume for options is very volatile in normal time, in a panic situation, it's far worse. It's possible that the broker couldn't find a volume/price match on the different option exchange to liquidate them pronto. Instead it took 4 hours, not abnormal.
Trading options is hard, unless you keep them until they expire for risk exposure or specific strategies, you could face serious liquidity and price risk.
The margin call you were getting could have been solved if you had ACH or wire transfer cash in your account immediately. Also your corresponding broker (not IBKR) might have played a role in all this.
We are speaking about 5 options in one of the most traded stocks of that day. I am not an expert, but I can tell you that volume/price match could not be a big problem at all in 4 hours. If I had 500000 options, probably yes.
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