IB - Margin Call on IRA Account?

Discussion in 'Retail Brokers' started by sirpangolin, Sep 16, 2005.

  1. I received a notice today that IB had to liquidate 100 shares of my position because I had insufficient equity in my account to cover it.

    But my account isn't a margin account -- it's a retirement account.

    So I emailed IB...I'm waiting for a response.

    Does this make sense????
     
  2. GTC

    GTC

    What were you trading? Stocks/options?
     
  3. JackR

    JackR

    There was a recent thread on this. The poster had some options which expired in the money and were exercised by IB. He had insufficient funds to cover the purchase. They sold the stock they purchased for him on Monday. The difference between the option exercise price ($300 a share) and the sale price on Monday resulted in a loss. His IRA equity was wiped out. IB took the $9K needed to cover the shortfall from his taxable account.


    He had not indicated that the option (he had about 10 calls on GOOG @300 if I remember correctly). The option closed ITM in the automatic exercise range and he had not elected the no-exercise option.

    I'd check my account to see if you now own something on which you had an option.

    Jack
     
  4. Thanks fellas for the replies, I appreciate it.

    I emailed them and they stated that the $10 charge they charge me every month put my account in a debit balance. In other words, talk about timing! The following day, I entered a trade, it happened to reverse on me, and triggered this call.

    It makes sense -- It's just that two things had to occur that had to occur to make this happen:

    a) The $10 charge occurred the day before

    and

    b) My long position had to go short resulting in a big enough loss ($10 loss doesn't even hit my stop loss yet) to cause an insufficient funds call to my account...

    Gotta love it. Mark this as a favorite in case it ever happens to you.

    Lessons learned? :) Don't fully leverage yourself the day after charge day. :p It's good this happened to be honest -- I was in hope mode and deviated from my strategy and I needed to get out anyway... :)

    Here's the excerpt from the email:

    Please refer to your September 15, 2005 Daily Account Statement where you will notice the August Market Data Fee of $10.00 charged to the account. As there was not sufficient cash in the account to cover the $10.00 fee, the account incurred a debit balance. Since a cash only account cannot carry a debit balance a liquidation was necessary to generate sufficient cash to eliminate the debit balance.
     
  5. alanm

    alanm

    Regardless of "charge day" or anything like that, getting within $10 of liquidation is just asking for trouble. Valuation methods aren't even consistent enough to cut it that close. Not to mention volatility in whatever positions you have.
     
  6. Ebo

    Ebo

    Another Piker!
     
  7. No... I'm not just 'another piker' as you put it.

    I made a mistake. It happens. Considering that I'm new to the game, sure I make mistakes. But I do have a strategy that I, for the most part, stick with, so I'd say I'm not just throwing money in the market.

    Considering that I've built this strategy, backtested for about five years, and have seen good results, I'd say I'm not just, 'another piker'.

    But thanks for the helpful reply.