Margin Call on an IB IRA account (Need Suggestions)

I suspect Interactive Brokers made a mistake and knows it.

In almost every thread that contains unfair criticism of IB one of their folks responds with an explanation. They have been remarkably quiet on this subject. This thread has been viewed (as I write this) 6,267 times and has had 79 comments written against it, a rather high number.

Perhaps IB is concerned about having to make Developer17's loss good.

Of course we haven't heard much from Developer17 either, so perhaps a quiet settlement was reached between IB and Developer17.
 
Quote from SirCurNon:

I never did have much respect for the CBOE as this is not the first case of misinformation I have encountered on their site.

I called OX today and was informed that they (OX) informed the OCC to NOT exercise those goog Calls when goog rose 0.1% or 30cents in afterhours. So no OX customer suffered the fate of the IB customer. Scratch them from my list. Yep, cheap is what you pay, cheap is what you buy.

I was not happy with the remainder of the OX conversation which went along the llines of 'that does not apply to brokers' and 'no, IRA accounts are not excluded automatically from selling stock short to cover Long ITM Puts or buying stock beyond the limits of the account and chasing the owner for the loss'.

I think this entire issue needs some serious study by legal eagles. Any flying about this nest? Perhaps involve the SEC at the very least who should be protecting the public. I bet even Optionetics preaches the 'no risk long options' lie. I know I have heard it on their Infomercial a yr or 2 ago.
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if goog had opened up 10 how many ox customers would have been pissed and demanding their money.
my charts show goog closing 30 cents in the money at the close. not afterhours. the op should have known and took precautions.
 
Quote from:
http://888options.com/learning/what_is_option.jsp


An equity option is a contract which conveys to its holder the right, but not the obligation, to buy (in the case of a call) or sell (in the case of a put) shares of the underlying security at a specified price (the strike price) on or before a given date (expiration day). After this given date, the option ceases to exist. The seller of an option is, in turn, obligated to sell (in the case of a call) or buy (in the case of a put) the shares to (or from) the buyer of the option at the specified price upon the buyer’s request.
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vhehn
I guess it is okay to change the rules of the game? The above site as well as the CBOE site I previously posted ( and emailed btw ) hold themselves out to the public as experts. Sure they tell you to read the Characteristics ... manual which is like reading IRS Pubs. Note that a 30cent change for a $300 stock is not the same as a 30cent change of a $30 stock in relative terms. 1% vs .1% The goog near the money options trade at about $3 a week or 60cents a day.
 
Quote from JackR:
I suspect Interactive Brokers made a mistake and knows it.

In almost every thread that contains unfair criticism of IB one of their folks responds with an explanation. They have been remarkably quiet on this subject. This thread has been viewed (as I write this) 6,267 times and has had 79 comments written against it, a rather high number.
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I agree. I think there may be legal action going on as I am sure this is not the only case of the goog 30cent incident. The OX customer rep I spoke to was well aware of the incident and suggested that they had a "bunch" of customers who would have been exercised had they not acted.

IMO the only fair solution going forward would be to establish a DNE (do not exercise) option for customers. Unless the object of their game is to screw the retail customer.
 
Hi Folks,

Sorrry about the silence since I have been travelling.

Just a few days after the margin call, IB place restrictions on my other account at IB, which had around $15,000 in equity. When I tried to transfer funds out of my account which I do every week, I noticed that the funds available had dropped by $ 9207 which is the exact amount by which I am negative in the IRA account in question.

I received a mail last week that they would be transferring $9207 from my regular IB accounr to "IB" and restrictions would be removed from my non-IRA IB account. I've posted the contens of the mail below

"Our account review is now complete. Due to adverse price movements in the price of Google, your account number UXXXXX incurred a debit balance of $9,207.65, which amount you owe to Interactive Brokers. Pursuant to the IB customer agreement, IB will transfer $9,207.65 from your account UXXXXX to Interactive Brokers in order to cover your debt to us. Account UXXXXX will be closed, but all restrictions on account UXXXXX will be lifted."

UNfortunately I will be returning back to the states only in the 3rd week of JUly since I was on international travel for the last month. I will meet a lawyer as soon as I get back.

Thanks for all the posts. I accept that it was my fault not to check the positions at 4:15 PM, but I never realized that I could be assigned that big a position with hardly any buying power in a Cash account, since the broker can't loan money to a cash account as per the agreement.


Will keep you all updated on the progress.
 
developer, thanks for the thread and the updates.

I know this will help others and serve as a warning about what can happen in the markets.

Regards.

C
 
Wow, can't believe this argument is still going on.

The fact that this was an IRA account is just secondary to the real point. The original poster would have been here complaining even if this had been a REGULAR account.

The point is the original poster didn't understand the risks and took a hit. There is no doubt this is his own fault, no matter the type of account, and should just suck it up and take it as a learning experience.

Involving lawyers and whatnot is silly, IMO. It's clear who is at fault.
 
Quote from SirCurNon:

IMO the only fair solution going forward would be to establish a DNE (do not exercise) option for customers. Unless the object of their game is to screw the retail customer.
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Customers already have that "DNE" option you are asking for. The original poster didn't take advantage of that option that was clearly available to him at any point after the opened his position. If he had, this thread wouldn't even exist.
 
Quote from Quah:

Wow, can't believe this argument is still going on.
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Quah -
If you bothered to read two posts back from yours you'd have seen it was the original poster. He's been out of the country and was updating us.

As was stated earlier in the thread - If the account owner had tried to exercise on his own IB's software would have stopped him in his Cash IRA account.

I think Developer17 should decide whether he wants to spend the money to go to arbitration/lawyer. It's just like the market - his money to risk for a potential return.
 
Quote from Whimsy:

As was stated earlier in the thread - If the account owner had tried to exercise on his own IB's software would have stopped him in his Cash IRA account.
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Look, the original poster hasn't said "I didn't tell IB to not exercise because I thought it couldn't happen because this was an IRA account".

He would'nt have told them not to exercise even if this was a regular cash or margin account. Either way he would have been in the same boat. Using the IRA account excuse is just a crutch that isn't going to hold any weight at all.

Why try to blame someone else for your screwup? He should be a man, own up to his screw up and move forward. Everyone is always trying to blame someone else. This one is really simple - he didn't "think" he would be exercised because he "thought" is closed below his strike price. It didn't close below his strike price, and he was exercised. Simple as that. Nothing to do with IRA accounts, etc. Why is that anyone's fault other than his own?
 
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