I just can't get my head around this crap. He knew before hand he was assuming the risk of liquidation pushing margins to the limit and he should have been aware of what can happen, is it that difficult to leave some room in your account? If goog tanked to 0 or went to the moon would he still have been complaining? gimme a break
A rigorous and strict risk management program, including prompt liquidation of customer positions exceeding risk limits, prevents customer losses from growing or gapping out of control during adverse market moves. This, in turn, protects a broker from its liability for uncovered customer losses. This, in turn, reduces the risk that the broker will go bankrupt. This, in turn, reduces the risk that customers will suffer losses, caused by their broker's bankruptcy, and not covered by SIPC or private insurance. The reduced risk of bankruptcy may also reduce the cost of private deposit insurance, and I think I read an IB employee's posting stating that it's private Lloyd's deposit insurance is cheaper because of IB's strict risk management practices. Cheaper insurance costs help support cheaper commissions. So this policy tends to minimize customer trading costs, and also tends to minimize risks to customer deposits. The downside is that if you are a high roller, leveraged up to your gills, without the commensurate knowledge, then you might get whacked. IB's policy is most beneficial and protective for more conservative, more sophisticated customers, who require little handholding. I think that IB can and should continue to improve customer service and communication, and that perhaps this particular incident calls for IB to consider it as a learning experience as to how it can cost-effectively help improve communications so as to avoid similar incidents in the future.
IB exercised proper procedure.... Options that are assignable via American settlement have this issue... European settlement is for the SPXs ....and works much smoother with respect to spreads... Oh yeah...option spreads can be very very risky.....
I would have thought that even a monkey would start paying attention all day everyday when short ITM options. It's not like they don't tell you, the assigned positions show up immediately in the account window, so it's not rocket science to monitor this.
Assigned positions may not always appear immediately. This was a known issue at IB about one month ago - that there were times when assigned options would "NOT" show up in your account/TWS without actually restarting your TWS. In my experience this was rare but I would still see about 5 examples of this each month. And this is a major issue for any trader... For the record, it is possible that this is now fixed as I have not seen it happen in about one month.
It would be nice if email/SMS were generated for assignments, liquidations, etc. just like some of the other events that trigger them now. This could fill the gap for any technical problems with TWS, or people that are not continously logged in. Assignments normally occur overnight, not during the day, right? (I'm aware of the problem where some assignments didn't get processed, and the positions showed up later in the day - I'm asking about the normal process)
Perhpas a good idea (email notification) - I mean it can't hurt. Yes, assignments happen over night - I believe it is IB's goal to make sure that they are ALL processed and update the account immediately.