You sell a call/put, get assigned, and don't have the money in your account to pay for it? And you don't have a margin account?
What Happens If...
- Thread starter rgilbert93
- Start date
OptionsXpress for one... well I assume it's not a margined account. I don't have to keep 2k+ in but it's considered a "level two"..
You get an SEC REG-QK violation and arrested for fraud. (ie: kiting scam)
(18 U.S.C. § 1344), misapplication (18 U.S.C. § 656), or required entries (18 U.S.C. § 1005). It can draw a fine of up to $1,000,000.00, imprisonment for up to 30 years, or both
With the exception of accounts eligible for portfolio margining ... option requirements are meant to avoid a margin call at exercise. So the minimums are set equal to the Reg T minimum for stock. The account has to be a margin account or a cash account with enough cash to secure the strike.
I believe the level 2 distinction refers to allowed strategies.
I believe the level 2 distinction refers to allowed strategies.
To write options you need a margin account. If you don't have it then you cannot write options, even if they are cash secured puts, you still need a margin account.
To answer you intial question, if you are assigned and don't have enough money to cover the assignement then your broker will issue you a margin call and you would then have to either deposit more cash or close out the position.
I just cannot see how he does not have a Margin account and is capable of pulling this trade off.
Sorry, I realized this earlier today, haha.