Dividend risk in trading spreads?

[dumpdapump]

Fair so what do you do when a client is long or short a futures contract and margin is exhausted? When and how do you issue the call and how much time do you give clients?

In his example, that is not what he asked. He asked what happens from early assignment from a vertical call spread. That means you end up being long call and short stock, which is a hedge position with a limit to losses, but in a reg-T account, an increase in margin, that cause a call.

Your example is not the same.

 

[Robert Morse]

Futures are different than securities as not all margin calls have to be met with cash. At end of day, the FCM, calculates margin. They issue a call which must be met with reduction or cash. The CME requires that call be met the day of the call or requires the FCM to put up money. The FCM will hit those accounts with a fee. To be honest, I prefer the client reduces right away or add cash. I also prefer that the clients stay off the radar of risk. Any Day-Trader that get call often should have their excess margin revoked. Any position trader that gets calls should reduce and try not to get into calls at all.

The call from the question in this thread, was out of the control of the trader. Margin calls from trading are.

 

[dumpdapump]

thanks for the explanation, though you probably agree that it would be more prudent if a firm had a firm policy (not just the stance of one of his reps) to immediately reduce exposure if a client did not do so before his/her margin was depleted? I am talking about exposure that is not covered by a hedge, such as long/short futures positions, short call/put exposure...markets even before the end of day can rip a huge hole into accounts, even in index products, particularly however in single stock products.

Futures are different than securities as not all margin calls have to be met with cash. At end of day, the FCM, calculates margin. They issue a call which must be met with reduction or cash. The CME requires that call be met the day of the call or requires the FCM to put up money. The FCM will hit those accounts with a fee. To be honest, I prefer the client reduces right away or add cash. I also prefer that the clients stay off the radar of risk. Any Day-Trader that get call often should have their excess margin revoked. Any position trader that gets calls should reduce and try not to get into calls at all.

The call from the question in this thread, was out of the control of the trader. Margin calls from trading are.

 

[zdreg]

there is an old wise saying on Wall Street never meet a margin call.