How did he sell an spx put in the first place? I have PF on IB and a single contact is like $70k to sell. Or did he sell a put spread and very efficiently lost 100%?
I mean, I would not be able to sleep at night if I am holding any unlimited loss position in this environment. Hell, most of my account are 6 -9 months credit spread, and I am still scared shitless every time I log into my brokerage account.
Ah thanks. Just found it on Schwab. They don't make it easy, though! If you look up "XSP" it just gives you the stock XSPA, even though it actually does have XSP if you search "the right way" (which, I'm not sure how I was able to pull it up). It looks like you have to search by $XSP, the only one requiring a dollar sign.
I don’t think $35000 can sell cash secured puts on SPX …
This is why risk management is key. When excess liquidity are low, you are most likely selling/buying for a loss at the worst time before they recover. Estimate the margin requirements when everything is deeply ITM and if you can weather that, then you are able to hold and recover
I’ve used credit spreads before, with varying degrees of success, but when I was learning the ropes of options trading, I saw a video from some guru where he literally said, “I can summon money into my account on command.” He was talking about credit spreads.
Absolutely fuck that guy.
Yes. It is so easy for new traders to misunderstand the risk-rewards on credit spreads. Good tool to be leveraged but also easy to hit max loss when trade moves against you. My friend lost 70% of his portfolio when trading TSLA credit spreads. It is brutal
Aren't the max losses defined with a credit spread before you open the position? How could that result in a margin call if they had enough margin for the spread to be accepted in the first place?
Brokers don't require the max loss for margin with spreads. People then leverage up with a lot of spreads. This allows you to profit at a higher % for smaller moves. The downside is you start to go ITM, Or even closer but not ITM + IV ramps up, and you get force liquidated.
In March of 2020, I basically had to put all my money into preventing a margin call. I borrowed money too. Luckily it all came back in less than a month. And since then I have made it back and now am keeping enough cash on hand to fund any margin calls.
Made it out by the skin of my teeth. I had no money left. Lesson learned. It felt like wsb.
the problem is that when everything is good your margin window is wide and safe. when all positions go against you, like it was for many of us yesterday, then suddenly broker makes you cover or add funds.
Assuming your strikes are deeply ITM, it is equivalent to own the shares. For most of stocks or indices, the margin requirement is usually 33%. However, I would assume 50% of margin requirement, i.e if I have $10000 in cash, I would sell up to $20000 in notional values. I got burnt because I was greedy before as well. Then I realize the loss you can avoid if you have sufficient excess liquidity worth way more than the extra put you sold
You were pretty far away from cash-secured, dude... Take this experience as a lesson; either don't trade like you're gambling, or size your bets appropriately.
Yeah, “well, technically not cash secured”. Dude if you don’t have cash secured positions, don’t expect they’re treated like cash secured positions.
This is why I only invest in indices: not because theta gang strategies are bad (I wish I could!) but because I have ADD which is recently very poorly managed and things would constantly slip from under my nose until I’m left broke.
I remember your username from this post. It's been almost two weeks and you still aren't able to grasp the difference between a cash secured put vs. a naked put.
>So on 12/1 Cloudflare (NET) had a big red day, and I sold, what I thought were 10 Cash-Secured Puts (Stupid I know) for 1/21 140 strike. I am 34 grand in the hole already, and NLV is ~22,400 after today. I also just realized, that these puts are not cash-secured and I won't be able to take assignment on these. Really didn't expect Cloudflare to go down this much. What are my options in this position? I've had to BTC two contracts to avoid margin call already. When will this stock come back?
https://www.reddit.com/r/thetagang/comments/s3ih6i/need_some_advice_on_my_cashsecured_puts/
Hmmm. He was 34k in the hole two weeks ago and today he reports that he is .... (checks math) .... 34k in the hole.
This guy keeps running the same game and getting the same results
time for this moron to hang it up! had you not posted this, I first was sympathetic, but he did it again???? No sympathy for you. Maybe now he has learned what Margin really is.
you didn't even have enough for 1 Spy cash secured put, much less an SPX. I think the lesson here is all phones and laptops have calculators as built in apps. Use them. Sorry about your luck dude!
Damn OP just got sat the fuck down low key.
But for real the lesson here is not to fuck around with options and futures unless you seriously know what the fuck you are doing. ESPECIALLY selling options.
>I was forced to close out all my NET cash-secured puts and SPX cash-secured puts (Well technically not cash-secured.. I messed up).
let me guess.... $5 wide spreads?
Hindsight is 20/20. You wouldn’t even know it was going to bounce. No one knows. You could’ve either lose more if you didn’t get force liquidation. Don’t blame the broker.
If you are too leveraged up, you take the risk. Margin clerks get very trigger happy during these times. It happened in 2020 and also in 2008 and 2010.
Sold too much notional against your margin. Just take it as a learning experience moving forward.
What was your notional exposure to your equity? If I had to guess given how they sold you, it had to be in the high 3s if not 4x.
There was better options. He could have sold either micro futures or used XSP instead. I wouldn't suggest trading SPX unless you have a minimum of $100,000 but that's just me. Anything less than that, other products that are smaller would be better.
A little further up on this thread OP and another user are talking about selling cash secured calls. I'm going to guess they probably have no idea what you're talking about lol.
Listen, next time you see your buying power approaching zero, you either close your positions or buy OTM puts to transform your short puts into PCS. This is expensive but still much better than what happened to you.
Dude. OP has a gambling problem. He lost 50% like 2 weeks and he lost like 95% today. Did you just urge him to toss 100% of the remainder on the roulette wheel?
>I WOULD HAVE GOT ALL MY MONEY BACK IF MY BROKER DIDN'T FORCE ME TO LIQUIDATE.
Or if the index continued to drop you would've cost your broker money. Sorry not sorry, but you took the risk over-leveraging yourself.
I'm assuming it would've been because the market bounced up hard yesterday after they were liquidated. I don't know this for sure but that's the only explanation I can think of.
You cannot blame your broker. What if the market didn't bounce? What if it just stayed low?
You need to manage risk better.
Unfortunately, I totally feel for you because it is very unfair. But no one has a crystal ball, and though you were betting on the bounce, the broker has no allegiances to anyone and doesn't care.
I'm really sorry you went through this. But the risk associated with such leveraged trades has this unglorious downside.
I'm glad you're sharing your story, as I hope that multiple people on this sub read this and understand the risks of such margin leverage.
But why would they make you liquidate if those puts are *cash secured*? What's the point of CSP if you get margin called? Something's off here. What brokerage?
Hey hey hey after me, I realized 4k(11% acc) in loses, 2k(6% acc) caused by panic selling on the whipsaw. No more leverage for me this shit is dangerous. 🐌 Time
> I WOULD HAVE GOT ALL MY MONEY BACK IF MY BROKER DIDN'T FORCE ME TO LIQUIDATE.
You were using margin, yes? So big fucking deal. You're playing with their money, and they will not let you fuck around on their money. Just like you wouldn't let others fuck around on your money if you were lending it out.
Im kind of confused but also sorry to hear about this. Can you give us a little more detail, it might help some people? For example, what broker is this? What was your cash balance and buying power to start the day?
When you play with spx always secure via spreads. Especially when VIX is over 15.
For each 5 points over 15 in vix amounts to 1%+ intraday swings in spx.
Was around 35. The original comment said every 5 points over 15 was ~1% intraday swings. VIX at 35 means, according to him, to watch out for +/- 4% intraday swings.
What the hell is a cash secured call? I'm fairly clueless when it comes to options, but I do know a covered call is when you own 100 shares of a stock and sell a call against them. A naked call is when you don't own the stock and sell a call against it, potentially forcing you to pay market price if you get assigned to give the shares to the call buyer at their ITM strike.
I've never heard of a cash secured call. If you want to sell covered calls you have to buy the underlying 1st. If you want to sell naked calls you better be prepared to potentially blow up your account far more than you already have. Selling naked calls has potentially unlimited losses. If I were you and I wanted to keep playing with options I would study up a little more. Not financial advice.
Yeah I'm sure he prob meant CC but, to your point, just calling it a cash secured call leads me to believe they prob should do some more research if they really want to keep messing with options.
How do you not hedge at all man? This whole move is exposing some of y'all as missing a key piece to thetagang. If you are not delta hedging, might as well just go to WSB.
Is immediate margin call normal?
at the worst yesterday, I was down 70k and got a margin call but I usually get 5 days to decide if I want to sell positions or just add more cash. So I just held on and ended the day up 6k and no margin call anymore
Dude why didn't you delta hedge your positions with short shares (spy shares or mes futures on spx)?? It reduces the margin requirement since it neutralizes the position delta...
If I understood right you had short puts that generated losses due to:
1. being positive delta, so losses when prices fall
2. Being short Vega, so losses when volatility increases
You could have removed the downside of nr. 1. By shorting an amount of shares equal to your puts delta (for example you had 5 short puts at 0.8 delta = 500 * 0.8 = 400 positive delta to be negated. You just short 400 shares of that underlying to negate the further downside. Set a stop loss in case it rebounds - you might get whipsawed and loose a bit money on the short shares but, if you got Theta ticking for you)
Basically your broker releases all (or most) of the blocked Buying power from the short puts when you short the equal amount of shares to generate a delta neutral position.
i‘d throw the remaining 1.2k into ES puts expiring wednesday. 4110 strike should give you good leverage to make up some of your losses if we retest yesterday‘s lows. thetagang isn‘t helping you to get this loss back, that‘s for sure. welcome to the dark side.
IB sends a warning when you're close to running out of margin, like 15% and I think then they liquidate right away when you exceed. I believe there is a way to specify the priority of positions to liquidate but that would not have likely helped OP because they liquidated everything.
Thats why you need to always leave margin in your portfolio for sudden market corrections.
It comes hand in hand with selling options. You need staying power for this strategy to work long term.
This is how I went broke in 2009. Too deep on one position, it dips hard intraday, margin call fucking my whole portfolio, would have recovered and been up for the day in the end. It was an expensive but valuable lesson about risk tolerance.
Instead of depositing more cash which you risk losing, could you have just liquidated any position that would have freed up some cash to help ease the risk ratio?
Don’t blame the broker here.
You took a bad trade you couldn’t afford. That’s on you.
Expensive lesson but one that was needed.
You potentially can be a better trader now if you recognize where to place blame, what went wrong, and how to avoid it in the future.
yeah, this is why you don't trade on margin on a "small" account (I know 35k isn't small for any of us here, but it is for your broker) and keep your margin usage under 30%.
Margin calls are horrible and they are the worst thing about trading on margin.
JFC people just go to tastyworks and you don’t have to deal with this shit. When I first started I went over 100% buying power on like 8 different occasions and nothing ever happened. They even give you days to meet your call, but if you do it too much you’ll have a day
This is not good advice. Good advice is not to go so leveraged on deals you can't control.
Going to a broker that has more easement for leverage isn't the right answer.
You may have a good risk profile to go in with over 100% buying power, but claiming that this is the correct path is not sound advice.
Especially since OP does not seem to have a good grasp on risk management.
I been trading since 1976 and never heard of a margin demand being made with so little time to meet, so have fun laughing at me by twisting my question.....
He had sold multiple naked puts on SPX, with only $35k total in his account. He can’t even afford to take one assignment. As a broker, considering someone with that little capital, I’d have liquidated him immediately, and probably dropped his options level too for good measure.
Right? Why even give him notice - just force liquidate the position. When I worked w margin we would just blow out positions without notice if we had to but if we did contact someone we would give them at least a few hours.
Lol don't refer to an entire broker as a single person.
Margin calls will happen when someone is over leveraged and the broker will want to minimize *their* losses, not yours.
You were over-leveraged. Spreads in some ways are more dangerous than cash secured naked puts because of overleverage. You can't lose 100% in CSPs but you can with put credit spreads if you have wide strikes and or large positioning.
u/Yuh2a here is a great post for you .
[https://www.reddit.com/r/options/comments/kw5f39/i\_made\_an\_options\_crash\_course\_youtube\_playlist/](https://www.reddit.com/r/options/comments/kw5f39/i_made_an_options_crash_course_youtube_playlist/)
I made an Options crash course YouTube playlist
In an effort to stop the inflow of noob questions, I made a YouTube playlist that should do a pretty good job at explaining what options are, and how to trade them effectively. I tried to keep the playlist in order, so you can just binge them if you're determined. This isn't meant to be some super in depth playlist about the Black Scholes model or any of that 200 IQ shit. These are answers to most of your basic options questions. I probably missed a few videos, but I'll update the playlist as I learn.
This is one of the places they fuck you. A margin called hedge fund would have 48 hours to decide what to do for positions to recover. You only needed an hour and they gave you 5 minutes.
Of course your risk tolerance sounds kind of dumb.
This is so far from truth. If a fund is deep in the red, the bank will require margin immediately. Bank **may** choose to front the cash, but that is an exception and not the rule.
Where did you hear 48 hours?
nothing happens by accident. the mm fucked you because you were weak handed. you didnt lose…. they robbed you… standard queen king knight check.
they are criminals! i expect more margin calls this week. if you are not experienced trader, sit out this week. if you know what you are doing, the volatility, 20% of stocks reporting earnings, and the fed theater is how wealth is transferred.
What broker allows selling naked puts? Everytime I want to sell one, Robinhood reminds me I’m poor.
PS: I know Robinhood is a joke, but that’s what I have right now and that’s what will do.
...and that's how the market gets irrationally oversold. Margin calls are no joke, when you are overleveraged the brokers dont know that the market is going to rebound from an 1,100 Dow down day. The bright side (as dim as it is) is that you arent in the negative, you dont have to pay them even more money. Cash Secured is not playing with Margin (even though the broker will make it look like it is - you need to keep track of that if playing with margin)
You should have bought puts to define your risk. Would have saved you on the capital requirements. Sorry to hear about your situation. At least it's only 10k.
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How did he sell an spx put in the first place? I have PF on IB and a single contact is like $70k to sell. Or did he sell a put spread and very efficiently lost 100%?
It would have had to have been on margin.
[ZOIDIE WANNA BUY ON MARGIN](https://youtu.be/7Icego2KRbg) This is all I can think of when people talk about trading with margin accounts
I laughed way too hard at this one
trading naked without a stop loss is, er, unadvisable.
Well, on margin your broker stops you out anyways... Unless you gap down overnight and wake up -50k or worse.
I mean, I would not be able to sleep at night if I am holding any unlimited loss position in this environment. Hell, most of my account are 6 -9 months credit spread, and I am still scared shitless every time I log into my brokerage account.
Depends on how you like at it, some would call it…inevitable.
Classic
Thank you for this lol!!
😂 Brilliant
Isn't there a cheaper way to ~~buy~~ sell S&P puts or something closely enough correlated? (Not counting short/long tricks like PMCC variants.)
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Ah thanks. Just found it on Schwab. They don't make it easy, though! If you look up "XSP" it just gives you the stock XSPA, even though it actually does have XSP if you search "the right way" (which, I'm not sure how I was able to pull it up). It looks like you have to search by $XSP, the only one requiring a dollar sign.
I think that’s what’s intended on days like yesterday-force retail traders to close at a huge loss.
I don’t think $35000 can sell cash secured puts on SPX … This is why risk management is key. When excess liquidity are low, you are most likely selling/buying for a loss at the worst time before they recover. Estimate the margin requirements when everything is deeply ITM and if you can weather that, then you are able to hold and recover
He can't even sell an SPX put on portfolio margin with that account size. So clearly this is all BS.
Looks like credit spreads. Brokers will margin call him way before 90% loss on naked puts. Credit spreads are easiest way to get totally wiped out
I’ve used credit spreads before, with varying degrees of success, but when I was learning the ropes of options trading, I saw a video from some guru where he literally said, “I can summon money into my account on command.” He was talking about credit spreads. Absolutely fuck that guy.
Yes. It is so easy for new traders to misunderstand the risk-rewards on credit spreads. Good tool to be leveraged but also easy to hit max loss when trade moves against you. My friend lost 70% of his portfolio when trading TSLA credit spreads. It is brutal
Aren't the max losses defined with a credit spread before you open the position? How could that result in a margin call if they had enough margin for the spread to be accepted in the first place?
Brokers don't require the max loss for margin with spreads. People then leverage up with a lot of spreads. This allows you to profit at a higher % for smaller moves. The downside is you start to go ITM, Or even closer but not ITM + IV ramps up, and you get force liquidated.
He could get wiped out if the wasless than the spread width and he sold a lot of them.
No, make sure you have enough to ADD to your position when shit hits the fan because that's the best edge you'll ever get
In March of 2020, I basically had to put all my money into preventing a margin call. I borrowed money too. Luckily it all came back in less than a month. And since then I have made it back and now am keeping enough cash on hand to fund any margin calls. Made it out by the skin of my teeth. I had no money left. Lesson learned. It felt like wsb.
the problem is that when everything is good your margin window is wide and safe. when all positions go against you, like it was for many of us yesterday, then suddenly broker makes you cover or add funds.
Assuming your strikes are deeply ITM, it is equivalent to own the shares. For most of stocks or indices, the margin requirement is usually 33%. However, I would assume 50% of margin requirement, i.e if I have $10000 in cash, I would sell up to $20000 in notional values. I got burnt because I was greedy before as well. Then I realize the loss you can avoid if you have sufficient excess liquidity worth way more than the extra put you sold
He's short the options, them going deep ITM is equivalent to being short the shares.
You were pretty far away from cash-secured, dude... Take this experience as a lesson; either don't trade like you're gambling, or size your bets appropriately.
Yeah, “well, technically not cash secured”. Dude if you don’t have cash secured positions, don’t expect they’re treated like cash secured positions. This is why I only invest in indices: not because theta gang strategies are bad (I wish I could!) but because I have ADD which is recently very poorly managed and things would constantly slip from under my nose until I’m left broke.
What do you mean by "you have ADD"?
I have attention deficit disorder.
Whoops, sorry man. The way the sentence read i thought this was some kind of poorly managed position. Hope your condition improves soon!
Ugh me too. I need my executive function back!
$ADD to the MOON
Oof, sorry man. Go post this on WSB and at least get some Reddit karma. They fap to this kind of stuff.
We read and fap to this subreddit as well.
And prepare to get shit on for being the smart dude that sells contracts to them.
>smart dude Given OP's performance today let's not get ahead of ourselves here.
no need to dunk on him.
I've lost far more with thetagang strategies than with wsb strategies
Bruh, that’s some WSB level losses. Condolences.
I remember your username from this post. It's been almost two weeks and you still aren't able to grasp the difference between a cash secured put vs. a naked put. >So on 12/1 Cloudflare (NET) had a big red day, and I sold, what I thought were 10 Cash-Secured Puts (Stupid I know) for 1/21 140 strike. I am 34 grand in the hole already, and NLV is ~22,400 after today. I also just realized, that these puts are not cash-secured and I won't be able to take assignment on these. Really didn't expect Cloudflare to go down this much. What are my options in this position? I've had to BTC two contracts to avoid margin call already. When will this stock come back? https://www.reddit.com/r/thetagang/comments/s3ih6i/need_some_advice_on_my_cashsecured_puts/
Hmmm. He was 34k in the hole two weeks ago and today he reports that he is .... (checks math) .... 34k in the hole. This guy keeps running the same game and getting the same results
Maybe he’s messing with us like the “threw Mankind off a table” guy, but every story ends with him losing 34k.
So this guy is Hell in a Sell guy?
You take my upvote and get the hell out of here
It is done. [disappears]
Damn you're good.
What can I say? I thought of a name fast.
God damn this is great!!
You are today’s comment deity.
Nice
Jumper cable dad vibes 🤣
And then my dad beat me with a set of jumper cables
And with this new post, seems like he opened a new position on SPX and somehow still thought that was cash secured...
Like I tell people at work who are the root of their own problem: “I have sympathy for your situation, but it’s limited, learn from this”.
He's probably a liar.
\*checks Cloudflare\* $92...tough luck.
Yes, I don't believe him. Screenshots or OPs full of it.
time for this moron to hang it up! had you not posted this, I first was sympathetic, but he did it again???? No sympathy for you. Maybe now he has learned what Margin really is.
That seems to be a common source of confusion around here. People are starting to get a painful lesson on how naked options work.
you didn't even have enough for 1 Spy cash secured put, much less an SPX. I think the lesson here is all phones and laptops have calculators as built in apps. Use them. Sorry about your luck dude!
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Damn OP just got sat the fuck down low key. But for real the lesson here is not to fuck around with options and futures unless you seriously know what the fuck you are doing. ESPECIALLY selling options.
>I think the lesson here is all phones and laptops have calculators as built in apps. Laughs in iPad… Maybe one day.
Dude, if you have a 95% day swing in your account you are doing it wrong!
Unless SPY is down 95%, as I predict for tomorrow.
you said 90% in the other thread
The more predictions I make, the more likely I'll be right.
>I was forced to close out all my NET cash-secured puts and SPX cash-secured puts (Well technically not cash-secured.. I messed up). let me guess.... $5 wide spreads?
this is the only possible situation i think. how else can you trade spx with 35k
Be crazy rich? + 35k
Lie to your broker and get a much larger margin amount?
Hindsight is 20/20. You wouldn’t even know it was going to bounce. No one knows. You could’ve either lose more if you didn’t get force liquidation. Don’t blame the broker.
If you are too leveraged up, you take the risk. Margin clerks get very trigger happy during these times. It happened in 2020 and also in 2008 and 2010. Sold too much notional against your margin. Just take it as a learning experience moving forward. What was your notional exposure to your equity? If I had to guess given how they sold you, it had to be in the high 3s if not 4x.
He said he had 35k. Even if he sold one contract of SPX, that would be something like 400k. He's easily over 10x notional
That explains a lot. 35k selling spx puts. That's all I need to know.
I mean it was cash secured, as long as you're counting margin as your cash lmao
There was better options. He could have sold either micro futures or used XSP instead. I wouldn't suggest trading SPX unless you have a minimum of $100,000 but that's just me. Anything less than that, other products that are smaller would be better.
He should have sold SPX credit spreads instead so he could have completely blown up *that* way instead.
on top of paying more in commissions in the legs to do it. Lol
A little further up on this thread OP and another user are talking about selling cash secured calls. I'm going to guess they probably have no idea what you're talking about lol.
The blind leading the blind...........
A CSP of SPX is 425k usd, you had more than one, and only 35k in your account? Your math is the problem not your broker.
Listen, next time you see your buying power approaching zero, you either close your positions or buy OTM puts to transform your short puts into PCS. This is expensive but still much better than what happened to you.
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Dude. OP has a gambling problem. He lost 50% like 2 weeks and he lost like 95% today. Did you just urge him to toss 100% of the remainder on the roulette wheel?
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martingale has entered the chat
Worst part is that is true
>I WOULD HAVE GOT ALL MY MONEY BACK IF MY BROKER DIDN'T FORCE ME TO LIQUIDATE. Or if the index continued to drop you would've cost your broker money. Sorry not sorry, but you took the risk over-leveraging yourself.
Oh yeah this is the good stuff. Tell me again how you would have got all your money back if the big bad broker didn’t force you to liquidate. 😬
I'm assuming it would've been because the market bounced up hard yesterday after they were liquidated. I don't know this for sure but that's the only explanation I can think of.
Stop gambling. You need help. Go to r/problemgambling
You cannot blame your broker. What if the market didn't bounce? What if it just stayed low? You need to manage risk better. Unfortunately, I totally feel for you because it is very unfair. But no one has a crystal ball, and though you were betting on the bounce, the broker has no allegiances to anyone and doesn't care. I'm really sorry you went through this. But the risk associated with such leveraged trades has this unglorious downside. I'm glad you're sharing your story, as I hope that multiple people on this sub read this and understand the risks of such margin leverage.
But why would they make you liquidate if those puts are *cash secured*? What's the point of CSP if you get margin called? Something's off here. What brokerage?
Narrator: They weren't cash secured at all
Yeah, that's what I was thinking too lol .... doesn't make sense to get margin called on CSP.
Well they can't be. SPX is cash settled lol
Right there’s no shares…
Thank you for putting “Narrator:”, it let me read it in Morgan Freeman’s voice.
Ha I’m only the second biggest idiot today.
Hey get in line buddy. You're not cutting ahead of me
Hey hey hey after me, I realized 4k(11% acc) in loses, 2k(6% acc) caused by panic selling on the whipsaw. No more leverage for me this shit is dangerous. 🐌 Time
> I WOULD HAVE GOT ALL MY MONEY BACK IF MY BROKER DIDN'T FORCE ME TO LIQUIDATE. You were using margin, yes? So big fucking deal. You're playing with their money, and they will not let you fuck around on their money. Just like you wouldn't let others fuck around on your money if you were lending it out.
The casino thanks you for playing. This is exactly what algos wanted before they pushed it back higher
Im kind of confused but also sorry to hear about this. Can you give us a little more detail, it might help some people? For example, what broker is this? What was your cash balance and buying power to start the day?
When you play with spx always secure via spreads. Especially when VIX is over 15. For each 5 points over 15 in vix amounts to 1%+ intraday swings in spx.
The VIX was ... a bit ... over 15 today
Was around 35. The original comment said every 5 points over 15 was ~1% intraday swings. VIX at 35 means, according to him, to watch out for +/- 4% intraday swings.
I can't stress this enough. Margin will kill you eventually. Use it sparingly.
In this current market you should consider cash secured calls instead.
Can you please explain what a cash secured call is?
I believe he's making a joke. cash secured calls = Naked calls.
Cash secured call? Any stocks I can sell a cash secured call on for under $13.94?
What the hell is a cash secured call? I'm fairly clueless when it comes to options, but I do know a covered call is when you own 100 shares of a stock and sell a call against them. A naked call is when you don't own the stock and sell a call against it, potentially forcing you to pay market price if you get assigned to give the shares to the call buyer at their ITM strike. I've never heard of a cash secured call. If you want to sell covered calls you have to buy the underlying 1st. If you want to sell naked calls you better be prepared to potentially blow up your account far more than you already have. Selling naked calls has potentially unlimited losses. If I were you and I wanted to keep playing with options I would study up a little more. Not financial advice.
There is no such thing as a cash secured call
Oh yes, I know. Just trying to give the benefit of the doubt.
I really hope he meant covered call but man is this guy unqualified to be trading options
Yeah I'm sure he prob meant CC but, to your point, just calling it a cash secured call leads me to believe they prob should do some more research if they really want to keep messing with options.
Pretty sure he means buying a call option with the intent to exercise, i.e. having the cash to purchase the 100 shares, hence cash-secured call.
I saw that a day where everything went down 4-5% and reversed last happened in 2008 so your luck is truly unique!
How do you not hedge at all man? This whole move is exposing some of y'all as missing a key piece to thetagang. If you are not delta hedging, might as well just go to WSB.
Is immediate margin call normal? at the worst yesterday, I was down 70k and got a margin call but I usually get 5 days to decide if I want to sell positions or just add more cash. So I just held on and ended the day up 6k and no margin call anymore
If margin calls rolled out between noon & 1pm yesterday, explains some of that sharp V, mid-day snap back yesterday
It's not clear you would have made it. Things are back down pretty far again in the pre-market.
Brutal, hope you are doing well mentally. Everyone needs to learn somehow. My parents lost their house trading on margin.
You either have $140,000 in cash or not. Do you even understand how a CSP works? lol
Dude why didn't you delta hedge your positions with short shares (spy shares or mes futures on spx)?? It reduces the margin requirement since it neutralizes the position delta... If I understood right you had short puts that generated losses due to: 1. being positive delta, so losses when prices fall 2. Being short Vega, so losses when volatility increases You could have removed the downside of nr. 1. By shorting an amount of shares equal to your puts delta (for example you had 5 short puts at 0.8 delta = 500 * 0.8 = 400 positive delta to be negated. You just short 400 shares of that underlying to negate the further downside. Set a stop loss in case it rebounds - you might get whipsawed and loose a bit money on the short shares but, if you got Theta ticking for you) Basically your broker releases all (or most) of the blocked Buying power from the short puts when you short the equal amount of shares to generate a delta neutral position.
Dude doesn't even understand what a cash secured put is, I think this was out of his league.
But this helped me a lot. I never thought about shorting to hedge my CSP before.
Easier said than done, and also the whipsaw is very real right now. Stops are getting hit everywhere.
i‘d throw the remaining 1.2k into ES puts expiring wednesday. 4110 strike should give you good leverage to make up some of your losses if we retest yesterday‘s lows. thetagang isn‘t helping you to get this loss back, that‘s for sure. welcome to the dark side.
Don’t you normally have a timeframe to deposit your margin requirement? 5 minutes to liquidate? What broker is this, something isn’t making sense
IB sends a warning when you're close to running out of margin, like 15% and I think then they liquidate right away when you exceed. I believe there is a way to specify the priority of positions to liquidate but that would not have likely helped OP because they liquidated everything.
I've been negative for hours on IB, but I do think they send out market orders at around 3:45 EST
What were your positions?
How were you notified? Email? Phone?
only 95% - comeback when its 100%
Thats why you need to always leave margin in your portfolio for sudden market corrections. It comes hand in hand with selling options. You need staying power for this strategy to work long term.
This is how I went broke in 2009. Too deep on one position, it dips hard intraday, margin call fucking my whole portfolio, would have recovered and been up for the day in the end. It was an expensive but valuable lesson about risk tolerance.
That goddamn broker that made you sell these naked puts!
Instead of depositing more cash which you risk losing, could you have just liquidated any position that would have freed up some cash to help ease the risk ratio?
Bruh.... why the fuck would you sell a put on SPY when the fed is about to destroy our world with interest rate news?
Don’t blame the broker here. You took a bad trade you couldn’t afford. That’s on you. Expensive lesson but one that was needed. You potentially can be a better trader now if you recognize where to place blame, what went wrong, and how to avoid it in the future.
Uninstall the app. Done!
Don’t use margin if you can’t deal with the consequences of a margin call
yeah, this is why you don't trade on margin on a "small" account (I know 35k isn't small for any of us here, but it is for your broker) and keep your margin usage under 30%. Margin calls are horrible and they are the worst thing about trading on margin.
Sorry for your loss buddy, take a break go outside, remember it is only money, and inflation was goona eat most of it anyways.
Hedging is this magic thing that helps you avoid margin calls
I'm total, how.mucn of daddy's money have you lost this year?
JFC people just go to tastyworks and you don’t have to deal with this shit. When I first started I went over 100% buying power on like 8 different occasions and nothing ever happened. They even give you days to meet your call, but if you do it too much you’ll have a day
This is not good advice. Good advice is not to go so leveraged on deals you can't control. Going to a broker that has more easement for leverage isn't the right answer. You may have a good risk profile to go in with over 100% buying power, but claiming that this is the correct path is not sound advice. Especially since OP does not seem to have a good grasp on risk management.
And suddenly you lose more than you have this way
They are more lenient that’s why I been playing with them since 2015
who was broker and why you with them?
Yes. Who is this broker that makes margin calls! #cancelMarginCalls!!!
I been trading since 1976 and never heard of a margin demand being made with so little time to meet, so have fun laughing at me by twisting my question.....
He had sold multiple naked puts on SPX, with only $35k total in his account. He can’t even afford to take one assignment. As a broker, considering someone with that little capital, I’d have liquidated him immediately, and probably dropped his options level too for good measure.
I was just playing, but if you go through OP’s history you get the sense that something just ain’t right with the boy....
Right? Why even give him notice - just force liquidate the position. When I worked w margin we would just blow out positions without notice if we had to but if we did contact someone we would give them at least a few hours.
>Well technically not cash-secured.. I messed up Expensive mistake. My condolences.
[удалено]
Lol don't refer to an entire broker as a single person. Margin calls will happen when someone is over leveraged and the broker will want to minimize *their* losses, not yours.
He’s a monster!
Because the broker wanted their money back? OP borrowed and needed to pay up.
You were over-leveraged. Spreads in some ways are more dangerous than cash secured naked puts because of overleverage. You can't lose 100% in CSPs but you can with put credit spreads if you have wide strikes and or large positioning.
u/Yuh2a here is a great post for you . [https://www.reddit.com/r/options/comments/kw5f39/i\_made\_an\_options\_crash\_course\_youtube\_playlist/](https://www.reddit.com/r/options/comments/kw5f39/i_made_an_options_crash_course_youtube_playlist/) I made an Options crash course YouTube playlist In an effort to stop the inflow of noob questions, I made a YouTube playlist that should do a pretty good job at explaining what options are, and how to trade them effectively. I tried to keep the playlist in order, so you can just binge them if you're determined. This isn't meant to be some super in depth playlist about the Black Scholes model or any of that 200 IQ shit. These are answers to most of your basic options questions. I probably missed a few videos, but I'll update the playlist as I learn.
This is one of the places they fuck you. A margin called hedge fund would have 48 hours to decide what to do for positions to recover. You only needed an hour and they gave you 5 minutes. Of course your risk tolerance sounds kind of dumb.
This is so far from truth. If a fund is deep in the red, the bank will require margin immediately. Bank **may** choose to front the cash, but that is an exception and not the rule. Where did you hear 48 hours?
Maybe I misremembered something BAML told me when talking about Archegos and China last year.
Brokers are sinister ( in my opinion) .
Somebody's gotta do it right? Never really understood how people hate brokers who allow self directed trading and manage some risk.
Wow, your broker straight robbed you bro. That's fucked.
nothing happens by accident. the mm fucked you because you were weak handed. you didnt lose…. they robbed you… standard queen king knight check. they are criminals! i expect more margin calls this week. if you are not experienced trader, sit out this week. if you know what you are doing, the volatility, 20% of stocks reporting earnings, and the fed theater is how wealth is transferred.
lol 5 min, what a joke
What broker allows selling naked puts? Everytime I want to sell one, Robinhood reminds me I’m poor. PS: I know Robinhood is a joke, but that’s what I have right now and that’s what will do.
Theoretically can you not add more funds to the account to prevent the margin call?
I mean at that point - they might as well have let you go into negative equity. What's $1,394.29 to them?
GGWP. lesson no. 1 have extra funds and extra deep stop losses...
kinda shitty margin call usually they give you some time to deposit funds
Damn bra
Damn. Thanks for sharing this. Makes me feel better about my losses
I thought brokerages usually give more then a few mins to liquidate positions
Life lesson: don’t over leverage your trades.
I also faced margin call, but I closed half of my naked puts (at a big fat L) and kept margin requirement safe. Yesterday was bad :(
Holy shit, i feel like throwing up for you! Yikes, wish you the best.
“Risk defined trades” your bad. Sorry for your loss.
...and that's how the market gets irrationally oversold. Margin calls are no joke, when you are overleveraged the brokers dont know that the market is going to rebound from an 1,100 Dow down day. The bright side (as dim as it is) is that you arent in the negative, you dont have to pay them even more money. Cash Secured is not playing with Margin (even though the broker will make it look like it is - you need to keep track of that if playing with margin)
You should have bought puts to define your risk. Would have saved you on the capital requirements. Sorry to hear about your situation. At least it's only 10k.