Clarification on margin calls
Here’s a summary of the main problem and solutions discussed in the post:
- Main Problem: The user is concerned about potentially receiving a margin call when trading options and whether they would have enough time to exercise shares and fill a short position before liquidation occurs.
- Solution Discussed: Fidelity representatives advised that margin calls have due dates listed on their website, and the urgency of liquidation may depend on the amount owed.
- Additional Information: The presence of related securities, such as options that oppose the short position, can affect margin requirements, and the user was encouraged to contact Fidelity’s Active Trader team for further clarification.
It’s important for the user to seek direct assistance from Fidelity for any specific concerns about their trading situation.
Here’s the full thread
I’m new to options and have never done any trading that dipped me into getting margin called.
I have some options at a strike price of 907.5, the breakeven is around 933, and there’s a week remaining.
Let’s say on Wednesday, the price has yet to breach the breakeven and I get antsy and would rather lock in smaller losses. Let’s say it’s around 925. I don’t find the option prices for sell to close to be favorable.
If I short the underlying stock with the maximum shares possible using the value of the rest of my account, that would presumably lead to a margin call. Would I have enough time to call Fidelity to exercise shares and fill the short position before any liquidation occurs?
Thanks for reaching out and for your patience, @putrid velociraptor love tabasco!
Margin calls are due when they are issued. If you do receive a margin call, the due date will be listed on Fidelity.com. Depending on the security and/or the amount of the call, the call may be accelerated.
If you’d like to review this scenario further, we recommend contacting our Active Trader team directly. These associates are available
Monday through Friday from 8:00 a.m. – 5:00 p.m. ET.
Fidelity Contact Information: https://www.fidelity.com/customer-service/contact-us
Please let us know if any other questions come up!
Options trading entails significant risk and is not appropriate for all investors. Certain complex options strategies carry additional risk. Before trading options, please read the Characteristics and Risks of Standardized Options (http://www.optionsclearing.com/about/publications/character-risks.jsp). Supporting documentation for any claims, if applicable, will be furnished upon request. 🟢
Okay good to know the amount owed affects the urgency of liquidation. Thank you.
Would the fact that I have a related security (the options opposing the short) change anything or is that something the system doesn’t check for?
Great question!
That is correct; your options contract would impact the margin requirements. If you have further questions about how it would, we recommend contacting our Active Trader team by phone using the link above. 🟢