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Very Profitable Position Force Liquidated After 999% House Maintenance Margin Met
- Thread starter craigr1
- Start date
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This guy is short 10,000 options in presumably a single stock, which is a million dollars/point.
It's his only position and 10,000 options in any single stock is a sizable print.
On top of that he is short a call.
This is the most toxic account ever.
His margin is only $4/share. My guess Etrade saw the size and added a liquidity haircut and then thought really hard about being on the hook for potentially unlimited losses.
my experience with Etrade has been positive and I have held positions as big as this guy but had the accounts appropriately funded.
It's his only position and 10,000 options in any single stock is a sizable print.
On top of that he is short a call.
This is the most toxic account ever.
His margin is only $4/share. My guess Etrade saw the size and added a liquidity haircut and then thought really hard about being on the hook for potentially unlimited losses.
my experience with Etrade has been positive and I have held positions as big as this guy but had the accounts appropriately funded.
Will you explain the math you used please? My previous experience with Etrade was largely fine as well and I negotiated pricing that was better than competitors. However their order routing and proprietary trading leaves a lot to be desired.
I had margin for more than a 60% move against me in the underlying had the other position more easily able to be liquidated if I needed it.
You may be largely correct about what you wrote regarding the logic. Even so, Etrade is not allowed to negligently misrepresent its margin requirements like that and there's precedent.
[URL='http://www.finra.org/sites/default/files/aao_documents/16-00131.pdf%3E']http://www.finra.org/sites/default/files/aao_documents/16-00131.pdf[/URL]
Without knowing the option you are trading, the math I'm using may or may not apply. You can PM me the position if you want. I won't share it.
If you are unwilling to state your position, any further discussion is futile and those commenting can only speculate.
Edit: see newwurldman had already commented - for what it is worth, he is a very knowledgeable and experienced trader. If your post wasn't a troll... you may consider his PM offer.
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http://www.finra.org/sites/default/files/aao_documents/16-00131.pdf
I was hopeful the community would be helpful and was wrong so I'm going to stop following this thread. If you think that I fabricated this to sow discord with the intent of provoking readers into an emotional response or of otherwise disrupting normal, on-topic discussion, for my amusement, then I guess I was wrong there too. I was objective, honest, and as transparent as I felt comfortable being and I asked for assistance, not questions regarding my position or Etrade's. Feel free to private message me if you're looking to be helpful. Thanks.
I was hopeful the community would be helpful and was wrong so I'm going to stop following this thread. If you think that I fabricated this to sow discord with the intent of provoking readers into an emotional response or of otherwise disrupting normal, on-topic discussion, for my amusement, then I guess I was wrong there too. I was objective, honest, and as transparent as I felt comfortable being and I asked for assistance, not questions regarding my position or Etrade's. Feel free to private message me if you're looking to be helpful. Thanks.
This is ET a "Public Forum" inhabited by trolls, newbies, wannabees and stealth traders.
You have 10 posts, and 1st post ever on the site was a verbose novel. When people asked the instrument, you refused. Skeptical? very much so.
A, serious inquires are normally not conducted on an anonymous forum. More appropriate channels are available, notwithstanding Legal council. (public posting anything related to the legal action is normally strongly advised against.)
You took screenshots of margin requirements, this exhibited your awareness of potential margin requirement changes.
B, If you truly wanted advice, at the least you should have been able to provide the trade details . Instrument, size, price (instrument is a rather important factor, especially when "naked put/call's are involved). No one can make an informed decision with partial information, same goes for advice.
C, You received an offer of assistance from newwurldman. I advised you that he was knowledgable and experienced. How much more "helpful" could I have been. He is an options expert and I am a directional position trader.
D, My guess, according to newwurldmans comments regarding the toxic nature of the naked calls, the Broker eliminated unnecessary risk on their part which no doubt is covered in the original broker agreement you signed.
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@NoBias covered what I wanted to say very well.
I would add that you are very focused on the percentage move that you were safe. Was this a $3 biotech stock? Was it a takeover candidate? Was it an index that rarely moves? This is why we need to know what stock and option you are short. A 60% move in a cheap stock is not a lot. If you are short 10,000 calls, 8 points could be your $8 million margin.
The agreement you signed allows them to do what they did, in a reasonable and fair way, which it sounds like they did.
I would add that you are very focused on the percentage move that you were safe. Was this a $3 biotech stock? Was it a takeover candidate? Was it an index that rarely moves? This is why we need to know what stock and option you are short. A 60% move in a cheap stock is not a lot. If you are short 10,000 calls, 8 points could be your $8 million margin.
The agreement you signed allows them to do what they did, in a reasonable and fair way, which it sounds like they did.