Sudden increases in maintenence requirements ...

Discussion in 'Retail Brokers' started by Option Trader, Jun 21, 2006.

  1. ...may this indicate the brokerage firms conducted their own behind-the-scenes recent research on the stock, that they fear something is about to surface about the stock?
  2. Sure. I've seen biotech stocks go to 50% maintenance just before an FDA approval meeting.
  3. ja, it happens also durin' RTH after news or report...good example is pozn [bio crap] couple of weeks ago, towards the end of the session: margins incresased to 50%.

  4. If this happens to you it indicates that you are rather a gambler than a trader. Such a raise will never occur in respectable stocks.

    The fact that the estimated risk for the broker changes so dramatically should give an indication of what drives the prices of these stocks. The reasons will probably not be economical ones.
  5. I'm thinking back now, and remember hearing that a possible cause for brokers to increase maintenance requirements is an increase of exposure on their part, even if from other clients.
    I would imagine that recent volatility can also be a factor.

    For granted if standing before an FDA decision, etc., but my question is if brokerage firms have their own expert team assessing risk of the stock using different information than is available to me and you.