Market-on-Open order at NYSE

Here are the margin requirements for short positions at IB:

Short Positions: If last sale price/share >= $5 then maximum ($5 per share, 30% * marginable stock value). If last sale price/share < $5 then maximum ($2.50 per share, 100% marginable stock value). Short sale proceeds are applied to cash and the short position is subtracted from equity.

In my case: 5000*$2.50 = $12.500

Markus
 
That shorts are not allowed below $5 is almost an urban legend. While most clearing firms do not allow it for risk management reasons, it can be done at IB, albeit with 100% or greater margin requirement, as previously posted.

"Marginable" and "can be carried in a margin account" are two different things. The former really means "allowed to have a minimum requirement of less than 100%" - that is, your broker can give you leverage by loaning you part of the position value. However, even if 100% (or more) is required, the position can still be held in a margin account, and can therefore still be loaned and borrowed.

Why would you post $2.50 cash to short an $0.80 stock? If it's 10:1 odds that it goes to zero - that's why.

Not that I could ever go to sleep with such a position :-)
 
Quote from Lightningsmurf:

Most stocks under $5 can't be shorted. More than likely that was your problem.
More...

Stocks under $5 may not be shortable at your firm, but that dosent mean it's industry wide. I was at a frim and we were able to short stocks under $5. It depends on your clearing firm.
 
Shorting of low priced stocks that are not classified as penny stocks falls under the SRO "cheap stock rule". IB implements this rule per SRO requirements:

stocks price = maintenance requirement
< $2.5 = $2.5
$2.5 to $5.0 = 100%
> $5.0 = greater of $5.0 or 30%

Not all brokers/clearing firms want to be bothered borrowing low priced stock. Some implement margin maintenance requirements exceeding the SRO requirements or do not allow short transactions below $5.

Your trade did not execute because the opening price of $.85 on the 6th was not an uptick based on the closing price sequence on the 5th of .87, .85, .85, .85. Since the market on open (MOO) or limit on open(LOO) order was not executable due to the up-tick rule, the order was immediately canceled after the first NYSE tick. If you want the order to remain active do not use a "on open" orders.
 
Quote from Markus_Koch:

Hi!

I tried to short SEI yesterday (Interactive Brokers). The stock traded at about 0.80 yesterday and the volume was at 300.000. I entered a MOO order at NYSE to short 5000 - the status indication in trader workstation was green at this time - about 10 minutes after the opening the status turned red an the order disappeared.

Please, can anybody tell me what I did wrong. There was enough volume at the open to get filled. Is there an uptick rule for MOO orders at NYSE?

Thanks in advance
Markus
More...

At what price did the stock open?
 
You must log in or register to reply here.
Back
Top