Seeking Insights on Missing Proceeds from Sales of Assigned Securities

T

TrastyTrader111

Hello fellow traders,

I hope this message finds you well. I'm writing to seek your experiences and insights regarding a specific issue related to my margin loan, which has left me with missing proceeds from the sale of assigned securities. The root of this issue lies in the lack of information regarding the specific amount of the margin loan provided by my broker.

Background: Over the past month, I've engaged in a series of email correspondences with my broker to inquire about the missing profits from my closed trade. My primary concern is that I have noticed discrepancies in the proceeds from the sale of securities, specifically assigned securities, and it's unclear how the margin loan percentage is affecting this situation.

Reference to SEC Guidelines: In my pursuit of clarity, I've referred to the SEC guidelines, https://www.sec.gov/about/reports-p...ublications/margin-borrowing-money-pay-stocks, which outlines the importance of understanding margin borrowing and its impact on stock transactions.

My Objective: Understanding how much of my margin loan in percentage terms. was allocated can significantly help me make informed decisions regarding my trading strategy.

Broker's Response: To date, my broker has been unwilling to provide a direct and specific answer regarding the allocation of margin loan offered on their platform. This is despite my best efforts, including providing closed-ended questions and multiple-choice questions (MCQs). They have consistently emphasized their preference for verbal communication and open dialogue for better understanding and full scope of the context which, while valid, has not addressed the specific issue I've raised.

I'm reaching out to this community to seek your insights and experiences. Have any of you encountered a situation where the lack of information about the specific margin loan amount affected the allocation of proceeds from the sale of assigned securities? How did you navigate it, and were you able to obtain the clarity you sought? If so, any advice or tips you can share would be greatly appreciated.


Margin Loan Amounts: In addition to this issue, I'm also interested in learning about the specific margin loan amounts offered by different trading platforms. If you're comfortable sharing information about the margin loan amounts provided by your platform, it would be valuable for comparison.

Additionally, if anyone can provide me with references or guidelines on how the specific margin loan amount and allocation should be handled in cases like this, it would be of great assistance in resolving this matter.

I truly believe in the power of collective knowledge, and I'm hopeful that your experiences and insights can shed light on this issue. Transparency and a full understanding of our accounts' financial aspects are essential in making sound trading decisions.

Thank you for your time and consideration.

Best regards,

Tom
 
I'm using Tasty Trade.

Do you happen to know where I can seek clarity on the % margin loan on this platform? or in fact I'm also curious to find out the general % margin loan offered by the various platforms on the market.
 
TrastyTrader111 said:
I'm using Tasty Trade.

Do you happen to know where I can seek clarity on the % margin loan on this platform? or in fact I'm also curious to find out the general % margin loan offered by the various platforms on the market.
More...

Rates start @ 11%.
Interactive Broker rates start a bit over 6%.
Tradestation starts @ 10%.

https://tastytrade.com/commissions-and-fees/

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Ok you are not providing us much clarity on your situation as your broker. What do you mean sale of assigned securities? You mean you got assigned to buy some stocks and then they were sold subsequently? And how does this margin loan come into play? If I understand you correctly, did you incur some margin loans to help you buy the securities that were assigned to you? And now you see they were sold but sold for less than what you think they should be and you are wondering whether that's due to payment of margin loans? Is this what you are trying to figure out?

If it is, first you need to find out how much of your assigned securities were bought on margin, if any. That's not difficult to figure out. Just look at your strike price of your options that were exercised against you and multiply by 100 and then multiply by the number of option contracts that you had at the time of exercise and you would've figured how much securities were bought. And then you look at the account balance that you had at the time, the difference between your account balance and how much you would have had to buy the securities assigned to you would've been the margin loan that you incurred. And then for the sale, you do the same. You first figure out how much would've been the total proceeds from the sale and then see how much you have gotten and the difference is the margin loan interest.

I think this is what you are trying to find out?
 
You're right, I was assigned securities and subsequently sold for a gain which I'm trying to figure where are my profits.

Believed I incurred 'some' margin loan and seek clarity on the absolute loan % from my broker.

Hi,

Thank you for your email and hope you're well.

Appreciate your many attempts to resolve my queries.

To keep it simple for you, I've provided the choice of answers for you.

How much of the margin loan was taken?
1: 100%
2: 50%
3: None of the above

Trust this will not take too much of your time and look forward to your answer.

Broker was patient enough to provide example of how T-Req margin works with screenshots of my sales transaction but failed to provide a direct answer to my question.

Hi,

Truly appreciate your time to reply with illustrations of how the buying power was restored in a margin account.

On top of the example of how margin works from SEC, below is an example by TD Ameritrade.

0

To better affirm my understanding of margin trading on your platform, please advise the following to clarify how much of the proceeds were repaid to Tasty Trades.

How much of the margin loan was taken?
1: 100%
2: 50%
3: None of the above

Trust this should be able to fill in the missing gap

Thank you in advance.


Broker mentioned he personally do not like TD definition using percentage when referring to profits and provide another illustration.

In this fictional account, we are purchasing 1,000 shares of XYZ for $10.00 per share. This will result in a total share value of $10,000.00. Since we only have to put up the initial margin requirement of 50%, $5,00.00 is deducted from our buying power, however 100% of the value will be deducted from our available cash balance, and the platform figures will look like this:

Cash balance: $-5,000.00
Net liq: $5,000.00:

Since we own the shares at $10.00, we need to sell them higher than this price to see a profit. Let's say we decide to sell this position at $15.00 per share. Since p/l is calculated by taking the difference of our original cost basis ($10.00) and the proceeds ($15.00), our profit for this trade will be $5.00 per share (or $5,000.00). However, our buying power will increase by the initial margin and the profit earned, and our platform figures will look like this:

Cash Balance: $10,000.000
Net Liq: $10,0000.00

While we repay 100% of the borrowed funds, our profits are only equal to the difference between what we actually paid for the shares ($10.00), and the price we sold the shares at ($15.00) to exit the position (minus any commissions, fees and margin interest).


In the above illustration, I do not see the the subject of my enquiry, 'Margin Loan' being mentioned.

Is my broker inferring margin loan and margin requirement are the same?
Why is my broker demanding 100% repayment of funds when only 50% was borrowed?
 
TrastyTrader111 said:
You're right, I was assigned securities and subsequently sold for a gain which I'm trying to figure where are my profits.

Believed I incurred 'some' margin loan and seek clarity on the absolute loan % from my broker.

Hi,

Thank you for your email and hope you're well.

Appreciate your many attempts to resolve my queries.

To keep it simple for you, I've provided the choice of answers for you.

How much of the margin loan was taken?
1: 100%
2: 50%
3: None of the above

Trust this will not take too much of your time and look forward to your answer.

Broker was patient enough to provide example of how T-Req margin works with screenshots of my sales transaction but failed to provide a direct answer to my question.

Hi,

Truly appreciate your time to reply with illustrations of how the buying power was restored in a margin account.

On top of the example of how margin works from SEC, below is an example by TD Ameritrade.

0

To better affirm my understanding of margin trading on your platform, please advise the following to clarify how much of the proceeds were repaid to Tasty Trades.

How much of the margin loan was taken?
1: 100%
2: 50%
3: None of the above

Trust this should be able to fill in the missing gap

Thank you in advance.


Broker mentioned he personally do not like TD definition using percentage when referring to profits and provide another illustration.

In this fictional account, we are purchasing 1,000 shares of XYZ for $10.00 per share. This will result in a total share value of $10,000.00. Since we only have to put up the initial margin requirement of 50%, $5,00.00 is deducted from our buying power, however 100% of the value will be deducted from our available cash balance, and the platform figures will look like this:

Cash balance: $-5,000.00
Net liq: $5,000.00:

Since we own the shares at $10.00, we need to sell them higher than this price to see a profit. Let's say we decide to sell this position at $15.00 per share. Since p/l is calculated by taking the difference of our original cost basis ($10.00) and the proceeds ($15.00), our profit for this trade will be $5.00 per share (or $5,000.00). However, our buying power will increase by the initial margin and the profit earned, and our platform figures will look like this:

Cash Balance: $10,000.000
Net Liq: $10,0000.00

While we repay 100% of the borrowed funds, our profits are only equal to the difference between what we actually paid for the shares ($10.00), and the price we sold the shares at ($15.00) to exit the position (minus any commissions, fees and margin interest).


In the above illustration, I do not see the the subject of my enquiry, 'Margin Loan' being mentioned.

Is my broker inferring margin loan and margin requirement are the same?
Why is my broker demanding 100% repayment of funds when only 50% was borrowed?
More...

My interpretation of using margin:

You borrow $5,000 for a $10,000 trade. 50% is margin (borrowed).
Buy = $10,000
Sell = $11,000
Profit = $1,000
Trade lasts 10 days so $5,000 x .11 (11% margin rate) = $550/365 = $1.50 per day x 10 days = $15 (total borrow cost).
Final profit = $1,000 minus $15 = $985 (minus any trading commissions/fees).
If your account started with $5,000, liquidity value should be $5,985.
Ask your broker if they agree. If not, ask them to explain.

***I don't use margin but this is my understanding.
 
I KILL TREES!!!

I trade online, but ask (and get) hard paper copies of all trades.

I'm old school...But I like it that way.
 
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