How does it work exactly? I've googled and asked support and I still don't quite understand it so can someone explain it in easy to understand terms. Lets say for example. I held 100 shares of XYZ stock and it closed $1 and went up $2 in AH. I sold it at $3 the next day in the premarket. So I make $300. What would the mark to market fee charge me if one is applicable? I am asking since the other day I shorted 70 shares of ABIO at 16.40 in the afterhours but it closed at $19 before afterhours. I covered it at $14.40 the next day for a small profit but only to find out a MTM fee was taken out of my account for $196. (Which was more than what I made.) How do I avoid this annoying fee the next time I hold a stock overnight? Should I just not short & hold stocks in afterhours if it fell way below the closing bell or vice versa?
You posted this once before and I still do not understand what your broker is talking about. Is this a US-based SEC-regulated BD? From only your information, your gross lose was $182 on day one. That does not include any fees. That is if the close on the primary exchange was $19. 16.40-19=2.60*70= $182. The next day, you covered at 14.40. Day 2 your gross profit, before fees, was 19.00-14.40=4.60*70=322. 322-182=140 gross. Did your account get a margin call or was there a overnight short charge on the borrow?
I will try to clarify it a little. I made $745.11 that day. I had a $35 overnight short fee, $60 locate fees and $109 commissions so that totals roughly $200 in fees. $745-$200= $545 profit. I had around $900 cash balance so my next day cash balance should've been $900+$545= $1445. Instead it was around $1240 which means the $196.70 you see there was taken out of my account from shorting 70 shares of ABIO in afterhours at 16.60. (It was 19.21 on closing bell.) I covered it 14.61 for $118.25 profit as seen in ss. What I don't understand is why are they charging me that $196.70 mark to market fee. I just found out something notice it says on ABIO I made $305.57. That it was from adding the $118.25+ -196.70. But why is the $196.70 minus? Did they make a mistake instead of +196.70 they put -196.70? Cause it doesn't add up in net change. If it was minus then my net change should be -87.83, not $305.57
The -$196.70 says Start of Day unrealized P/L which looks like your loss from day 1. I do not see anything wrong.
What I don't get is that -196.70 was calculated as if ABIO opened the next day at $19.20. But I did not short it at the price I shorted it at $16.40 in afterhours market and covered the next day at $14.61. But because on the closing bell it was at $19.20 I loss the difference of $2.80 per share on 70 shares the next day $2.80x70 shares=$196. Is that how mark to market works? 5/28/2020 SS ABIO 70 $16.40 18:28:30 Closing Bell $19.20 4:00 pm Then covered the next day at 14.61. 5/29/2020 BC ABIO 70 $14.61 04:02:00 Unless, they already refunded me that $196 which would explain why my net change is 305.57 on ABIO. But if they did that my account balance the next following day should've been around $1445 and not $1240. Which is why I suspect they either forgot to add the $196 back into my account or they took out $196 out of my account due to mark to market.
https://www.cmegroup.com/education/courses/introduction-to-futures/mark-to-market.html What is Mark-to-Market? One of the defining features of the futures markets is daily mark-to-market (MTM) prices on all contracts. The final daily settlement price for futures is the same for everyone. MTM was a distinctive difference between futures and forwards until the regulatory reform enacted after the financial crises of 2007-2008. Prior to those reforms most OTC forwards and swaps did not have an official daily settlement price so clients never knew their daily variation except as described by a theoretical pricing model. Futures markets have an official daily settlement price set by the exchange. While contracts may have slightly different closing and daily settlement formulas established by the exchange, the methodology is fully disclosed in the contract specifications and the exchange rulebook. Example Corn futures trade on CME Globex beginning the previous evening and officially settle for the day at 13:15 Central Time (CT). CME Group staff determine the daily settlement price of corn based on trading activity in the last minute of trading between 13:14:00 and 13:15:00. E-mini S&P 500 futures trading on CME Globex begin trade the previous evening (CT) at 5:00 p.m. The final daily settlement price is determined by a volume-weighted average price (VWAP) of all trades executed in the full-sized, floor-traded (the Big) futures contract and the E-mini futures contract for the designated lead month contract between 15:14:30 and 15:15:00 CT. The combined VWAP for the designated lead month is then rounded to the nearest 0.10 index point. This contract then remains closed for fifteen minutes between 15:15:00 and 15:30:00 and then resumes trading until 16:00:00 (4:00 p.m. CT) when CME Globex shuts down for one hour. U.S. Treasury futures begin trading on CME Globex at 5:00 p.m. CT and will trade through the next day until 4:00 p.m. CT. However, the daily settlement price is established by CME Group staff based on trading activity on CME Globex between 13:59:30 and 14:00:00 CT. In order to fully appreciate a futures contract’s final daily settlement price one needs to know the settlement procedures defined in the contract’s specifications. Once a futures contract’s final daily settlement price is established the back-office functions of trade reporting, daily profit/loss, and, if required, margin adjustment is made. In the futures markets, losers pay winners every day. This means no account losses are carried forward but must be cleared up every day. The dollar difference from the previous day’s settlement price to today’s settlement price determines the profit or loss. If my daily loss results in my net equity falling below exchange established margin levels I will be required to provide additional financial resources to replenish the amount back to required levels or risk liquidation of my position. Mark-to-market enforces the daily discipline of exchanges profit and loss between open futures positions eliminating any loss or profit carry forwards that might endanger the clearinghouse. Having one final daily settlement for all means every open position is treated equally. By publishing these daily settlement values the exchange provides a great service to commercial and speculative users of the futures markets and the underlying markets they derive their price from.
I may have just made a miscalculation from previous day locate fees & mistook the descrepancy in my buying power a deduction from mark to market. So my broker may not be to blame here. However, I been screwed so much in the past from their expensive overnight fees and platform issues that I never held high regard for them anyways. (The only reason I haven't switched brokers is there aren't many choices in Canada.) I emailed support and got an explanation so I am just gonna drop it for now. Torsha Jun 7, 16:35 Good Day, Kindly review the previous link and information we sent. Marked to Market just values the position at the end of the day. If the following day, your position is up in value, you will be credited the gain