What happens when a margin call occurs during vacation with other collateral in account?

[mervyn]

So you're saying that the exchange has built-in mechanisms to automatically liquidate positions and prevent a cash deficit? I've encountered some less diligent brokerages that seem to not follow this practice, leaving their clients vulnerable to holding positions with resulting cash losses.

In those cases, if there is in fact a cash deficit after the firm closes the position (assuming the brokerage is sloppy), would they then liquidate the options on futures position to generate cash to cover the shortfall?

name the broker, i don't believe any regulated futures broker would be that stupid.

 

[mervyn]

you don't know what you will keep as the execution price isn't guaranteed.

at that point you are completely done, 0% and 20% makes no difference. been there many times in 2022.

 

[killATwill]

name the broker, i don't believe any regulated futures broker would be that stupid.

etrade

 

[mervyn]

etrade

your setting is probably wrong, disable omnibus account, make those two separated accounts.

 

[CannonTrading_Ilan]

What about communicating with broker before going on vacation if you know you have positions that can get you in margin call?

 

[mervyn]

https://www.reddit.com/r/path%3D%252Fr%252Fwallstreetbets%252Fcomments%252Ffhonep%252F

 

[killATwill]

What about communicating with broker before going on vacation if you know you have positions that can get you in margin call?

Of course that's ideal. I'm just curious about the mechanics that take place when an account is in a cash deficit and there are non-cash positions (like options on futures). Do they get liquidated immediately to meet the deficit?

 

[CannonTrading_Ilan]

Of course that's ideal. I'm just curious about the mechanics that take place when an account is in a cash deficit and there is are positions non-cash positions (like options on futures). Do they get liquidated immediately to meet the deficit?

The way we work is we will try our best to reach out. If not able to, asses the risk of client going deficit. When it comes to futures with options it is not so black and white and each situation may be different. Brokers may have different policies.

 

[killATwill]

The way we work is we will try our best to reach out. If not able to, asses the risk of client going deficit. When it comes to futures with options it is not so black and white and each situation may be different. Brokers may have different policies.

I appreciate your candor. So you're saying that if there were a client with a $-2K cash deficit from a (conventional) futures loss, but a $+10K position in options on futures, you may actually use discretion and not liquidate that account's options on futures position?

 

[CannonTrading_Ilan]

I appreciate your candor. So you're saying that if there were a client with a $-2K cash deficit from a (conventional) futures loss, but a $+10K position in options on futures, you may actually use discretion and not liquidate that account's options on futures position?

If you had more than one option, I would liquidate enough to meet the cash call after 3 days as long as account not in risk of deficit. If it was just one option...tough question...Client history with margin calls will be one factor, how much time left on the option is another just to name a few.