What kind of operational issues? I heard old men say T+3 would bring about chaos. If options can settle overnight, why not stocks?
Good News Reminder: T+1 replacing T+2 comes in May 2024
- Thread starter Quanto
- Start date
Robert Morse
Sponsor
I know that I'm old because of the number of times I need to search for your acronyms to understand your statements.
This is IMO not true, because in a margin account you are forced to use margin all the time, ie. always!
Your own funds is not treated first, and only after that margin gets used. Nope!
Don't know how the situation nowadays is, but in the old days, say 5 years or so ago, this was the case I had experienced, and I definitely didn't like it...
Can you do a CoveredCall trade (ie. LongStock + ShortCall) without using any margin in your MarginAcct? I doubt it.
Ie. using just your own funds, not any margin loan from the broker.
Here's an interesting table of US brokers with their margin rates:
https://investingintheweb.com/brokers/brokers-lowest-margin-rates/
Last edited:
Robert Morse
Sponsor
Well, you can. You can do a covered call (Option Level 1) in a cash account.
Sorry, but this is not accurate. You always use your money first. And using leverage and borrowing money on margin are not the same thing.
Sorry, but this is not accurate. You always use your money first. And using leverage and borrowing money on margin are not the same thing.
I know, the question is whether one can do the same also in a MarginAcct w/o using any margin.
How can one differentiate the both in a MarginAcct? Is it possible at all?
IMO this cannot be true, even mathematically impossible
B/c the BuyingPower in a MarginAcct is computed from the own funds.
But when own funds get used first then BuyingPower would become zero, so the premise/promise of the usual RegT margin with "Intraday 4x margin BuyingPower" and "Overnight 2x margin BuyingPower" could even mathematically never be possible...
Last edited:
Robert Morse
Sponsor
Leverage is the BP you get based on your excess equity and your multiple. Trading on margin is the act of borrowing money to carry a position overnight. If your account has $10,000 in cash in a margin account or cash account, you can buy stock and short a call with a net payment of up to $10,000 and not use margin or pay interest.
Robert Morse
Sponsor
I'm at a loss on how to explain this to you.
IMO this cannot be true, even mathematically impossible
B/c the BuyingPower in a MarginAcct is computed from the own funds.
But when own funds get used first then BuyingPower would become zero, so the premise/promise of the usual RegT margin with "Intraday 4x margin" and "Overnight 2x margin" could even mathematically never be possible...
Try this:
Source: https://thismatter.com/money/stocks/margin.htm
BUT, as said, I made bad experience b/c broker did compute the BP intraday realtime, so it actually never was possible to make use of 4x Intraday margin. It was, at least theoretically, possible only if one used all BP in the very first trade of the day... I never tried it out, but I suspect that in reality it was actually not possible, by another reason they would come up with...
Ie. a BS method, IMO, if not fraud.
Last edited:
I wasn't talking about options,I was referring to straight stock trading.You're the one who brought up options. If you have 20k of your own money in the account and dont buy more than 20k worth of stocks(total) you aren't using margin. And no one has a gun to your head forcing you to buy more than 20k worth of stocks. And with a margin account you dont have to worry about some silly "settlement" date.
I mean options trading, yes.