Ib again.
- Thread starter raf_bcn
- Start date
Can you explain how auto liquidation "created" a 10% loss in your account?
What position did you have that was at break even, but when liquidated, incurred a 10% loss due to IB?
Losses caused by auto liquidation have ALWAYS been related to options based on what I have read. Read the past lawsuits against IBKR regarding auto-liquidation. ALL of them are related to options.
A bit unrelated, but the "regular" use of this expression is a bit spooky. I suppose traders mean it literally
Is it possible the following happened:
1) Part of a combo position was automatically closed due to inability to purchase SPY (PRIIPS/KID MIIFID)
2) This resulted in you having a margin requirement higher than your account value
3) The high margin resulted in auto-liquidation of assets (perhaps the remaining legs of options)
4) The early liquidation of options created an actual REALIZED loss (as opposed to PAPER loss)
(You might have been waiting for a change in market direction that you no longer can due to options being removed from your account, or you may have been planning to roll a position to avoid a REAZLIED loss).
In other words, I think what IB did was make you REALIZE what would have been a PAPER loss. You can recoup this REALIZED loss by opening a new position that covers the loss and transforms it back to a PAPER loss.
Since you were working with SPY your best strategy might be to move towards SPX. As far as I can tell, there is no restriction on SPX options.
On a separate note:
Buy SPY ETFs: No, too risky for retail clients.
Buy SPX Options: Yes, not considered as risky for retail clients.
I wonder what other surprises are coming down the pipeline that we are not fully aware of.
1) Part of a combo position was automatically closed due to inability to purchase SPY (PRIIPS/KID MIIFID)
2) This resulted in you having a margin requirement higher than your account value
3) The high margin resulted in auto-liquidation of assets (perhaps the remaining legs of options)
4) The early liquidation of options created an actual REALIZED loss (as opposed to PAPER loss)
(You might have been waiting for a change in market direction that you no longer can due to options being removed from your account, or you may have been planning to roll a position to avoid a REAZLIED loss).
In other words, I think what IB did was make you REALIZE what would have been a PAPER loss. You can recoup this REALIZED loss by opening a new position that covers the loss and transforms it back to a PAPER loss.
Since you were working with SPY your best strategy might be to move towards SPX. As far as I can tell, there is no restriction on SPX options.
On a separate note:
Buy SPY ETFs: No, too risky for retail clients.
Buy SPX Options: Yes, not considered as risky for retail clients.
I wonder what other surprises are coming down the pipeline that we are not fully aware of.
Robert Morse
Sponsor
Are you making this statement because of cash settlement vs stock settlement? Except for settlement, I would not agree with this statement. SPX is 10X the size of SPY with wider markets than SPY. SPX takes more skill to find liquidity.
I was commenting more from the perspective of which instruments are available to EU based retail traders. The sentiment from the latest regulations 'suggest' (wrongly so in my opinion) that SPX Options is safer than SPY ETFs, given there is a restriction prohibiting trading SPY ETF but none for SPX Options.
Robert Morse
Sponsor
Why would a EU based client not be able to trade US listed ETFs. I have client's in many countries trading them.
There is a new KID requirement and some major US ETFs (SPY, Qs etc) do not have it filed. There is a conspiracy theory that it was done to appease the European ETF providers. The KID (key investor document) forces to specify expectation of performance under various scenarios, which obviously is contrary to the US regs of “no performance prediction”.
Here is a bit more color: https://ontheregs.com/tag/priips/