it happened to me once or twice at harrisdirect i think... Turns out when you have a margin account, they keep also a cash account. Same account number, only one statement, so you wouldnt be able to tell just by looking online or on the statement whether a position is in the margin or cash account. For example, they issued a margin call once because most of the securities were sitting in the cash account, and those that were in the margin account were not enough to cover the loan value for a new stock i bought. Anyway, the position would appear twice if the long is in the cash account and the short in the margin account. In fact, come to think of it the short side would have to be in the margin account by law, so all you have to do is call them and ask to move the long position from the cash to the margin account. There are various reasons to keep a cash account even for people who are approved for a margin acount, one is that if you have a long position in a cash account, they are not allowed to borrow and lend it to a shortseller. Some short squeeses are orchestrated by a large number of longs moving their shares all at the same time from their margin to the cash account, this is enough actually, there is no need to ask for a stock certificate. When that happens the stock suddenly becomes hard to borrow and many shorts are "called in". K
Just a comment to you guys that you may not be aware of. You seem to be engaging in some more advanced strategies, especially shorting stocks....so I hope you're all aware that your "inexpensive" broker keeps all of your interest money derived from short selling stock...that is one of the least know "con jobs" in the retail securities industry. If you hedge or especially use a pairs trading strategy, imagine the rip off. You pay interest for your long GE stock based on your margin rates. You collect zero on the cash generated from your shor HON positon....this negates most of the potential profits from any serious strategies IMO. Go raise hell with someone!!! (If you're already up to speed on this, then "never mind" LOL).. Don
probably left over accounting methods from when short against the box was a common tax strategy. Old systems, never updated. Most retail brokers use ADP, or a system based on ADP, which has seperate cash, margin and short accounts as kotika describes. Who knows, if they auto- paired it off for you, I bet there is someone out there who would complain about that as well. There are some people that (wrongly) think being long/short the same stock is somehow better than having no position at all. I've seen it posted right on these boards in fact, as a "strategy". Of course everyone told him he was wrong, but there is no convincing some people. But Kotika pretty much has it right. Long in one "section" of your acct and short in another. Its an accounting thing and not nearly as malicious as some ppl make it out to be. Call them and ask them to pair it off. You dont have to pay 2 more commissions.
Don: Sorry if I put words in your mouth. Can you comment on what the "global position" rule is for prop traders? Is it summed across all your traders that share the same prop account, or is it sufficient to look at just an individual trader's sub-account? Sounds difficult to do "the right thing", even if you want to, if they are using different execution platforms, have orders that come from other firms but are cleared by SLK, etc. hajimow: Fido did the wrong thing. They should have sold out the long shares held in the account. Some firms (notably Fido and Waterhouse) charge the full human-assisted ticket rate or worse for exercise or assignment, and don't always publish those. Option traders should always get the rates for such things in print before entering positions. CTTrader: When you sold the shares on Tuesday without marking it as a short-sale, you violated the rule about marking short sales, and may have violated the uptick rule also (these are probably part of the same rule, but might be two separate violations). At the time you did it, you were net flat.
For assignments , they charge higher rates. They don't charge regular rates. You can call them and ask why.