Going broke in margin acct. and owing money

OptionFool said:
What if you blew up your account selling puts and calls and owed your broker $300,000. Will they (TD, IB, Schwab) come after you to pay it? What if you do not have it? What is the process they go thru to try and get at least some of it back? Thanks.
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it depends of who r u and what do u have

if you do not have much, you just walk
 
cole_ said:
I was reading a PDF by Larry Williams and he said that two of his students (a couple) got their house taken by their futures brokerage to pay the debt.

they often operate on thin profit margins so they will be very aggressive
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Wasn't he a trading instructor? Kind of looks bad if his students went into bankruptcy.
 
cole_ said:
I was reading a PDF by Larry Williams and he said that two of his students (a couple) got their house taken by their futures brokerage to pay the debt.

they often operate on thin profit margins so they will be very aggressive
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That all depends on which state said debtor resides. If you have a house.... make sure your wife's name is on the deed too. That pretty much makes keeping your home out of judgements levied against you bullet-proof. Might be hard to do ex post facto though.
If all else fails...max out every credit line you have on Bitcoin and skip town. :sneaky:
 
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OptionFool said:
What if you blew up your account selling puts and calls and owed your broker $300,000. Will they (TD, IB, Schwab) come after you to pay it? What if you do not have it? What is the process they go thru to try and get at least some of it back? Thanks.
More...
You must be one of those professional traders?

For us mom and pop retails, our brokers will not let us get to that point. For sure not Schwab who I have been with for 20 years and I always got margin calls as soon as accounts dipped below margins requirement. They are always in the position to liquidate my account before me owing them money?
 
ironchef said:
You must be one of those professional traders?

For us mom and pop retails, our brokers will not let us get to that point. For sure not Schwab who I have been with for 20 years and I always got margin calls as soon as accounts dipped below margins requirement. They are always in the position to liquidate my account before me owing them money?
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Schwab lets people buy options on margin?
Gotta like that.
hmph
 
OptionFool said:
What if you blew up your account selling puts and calls and owed your broker $300,000. Will they (TD, IB, Schwab) come after you to pay it? What if you do not have it? What is the process they go thru to try and get at least some of it back? Thanks.
More...

They will get a judgement on you and all your future wages/ income will be garnished....
 
Yes, they will get a judgement which will follow you around and attach assets if and when they appear. BK is the only way out of that trap....or changing your name and moving to Uzbekistan.
 
ironchef said:
Yes. Under certain conditions.
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A margin account is required only if you write options... because in theory your risk is unlimited. Even if its a multi-leg strategy with limited risk. Purchases of puts/calls however come directly from, and are limited to, the cash side of your account.

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I assume thats basically because with an option you can lose 100%, whereas with stocks they can define a reasonable margin risk.
 
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