Reduced Margin

Discussion in 'Trading' started by plugger, Mar 21, 2008.

  1. plugger

    plugger

    TD Waterhouse posted this gem for their clients today:




    FYI: Reduced Loan Value for Select US Securities


    SUMMARY:
    This information is relevant to margin accounts only.

    Due to recent market events, effective immediately, TD Waterhouse has reduced the loan value for 27 securities in the US Financials sector to 50%.

    In addition, the loan value of Lehman Brothers stock has been reduced to 0% and E*Trade Financial Corp has been reduced to 25%.

    Please refer to the list of affected securities below:

    Americredit Corp
    Anworth Mortgage Asset C
    Ashford Hospitality Trust
    China Direct Inc
    CIT Group Inc
    Compucredit Corp
    Corus Bankshares Inc
    Country Wide Financial Crp
    Downey Financial Corp
    Heritage Financial Group
    E*Trade Financial Corp
    FC Stone Group Inc
    First Marblehead Corp
    Lehman Brothers
    MF Global Ltd
    MGIC Investment Corp WIS
    National City Corp
    Newcastle Investment Corp
    Old National Banccorp Inc
    Penson Worldwide Inc
    PMI Group Inc
    Radian Group Inc
    Rait Financial Trust
    Redwood Trust Inc
    Resource Capital Corp
    Temecula Valley Bancorp
    Triad GTY Inc
    Washington Mutual Inc
    Western Alliance Bancorp
    MARGIN ACCOUNT IMPACT:
    If you are holding any of these listed securities in your TD Waterhouse account, your loan value and available margin will be reduced until further notice.

    CONTACT INFORMATION:
    If you have any questions or concerns, please contact an Investment Representative.


    They did the same thing for tech when the tech bubble started to unwind.
     
  2. Looks like buying puts on some of these stocks may be a good strategy. Some will be forced to sell their stocks, and with less margin others may not be tempted to buy them in the future. No demand=lower price.
     
  3. I agree. I think puts would be a good idea here
     
  4. They're not the first ones to tell clients those stocks are crap so a lot of that is priced into the puts. You'll be paying top top dollar/implied volatility for those already.
     
  5. These restrictions would also reduce one's ability to short. So less buying demand, but also less selling demand.
     
  6. ammo

    ammo

    might mean increased option demand