As I might have heard, recently OptionSellers.com got bankrupt, and customers lost1.)Their entire Balance2.)They are in negative , aka into margin debit balance(unsecured), which would be going into collections, if unpaid.Using that as an example:-My question is, if I trade into my account as an individual(or with spouse: joint owner with survivorship), how do I shield myself, in such situations, where if I screw up something, losses are limited to ONLY what my trading account balance, and NOT beyond that.I know there are multiple scenarios which can blow up your account (into negative), if you do NOT hedge properly, such as 1.)PIN RISK2.)TAIL RISK3.)NAKED OPTIONS or FUTURES.Hence asking, this questions. Does LLC protect in this scenario, if you are managing your accounts individually?Is there a way we can specify in brokerage accounts(tdameritrade in my case), that losses should be limited to my current balance in your trading account, and NOT impact my personal assets?Basically, I don't want my family to get affected, into REAL Negative BALANCE, because of any catastrophic loss.I currently have my account with TDAMeritrade, with JOINT OWNER WITH SURVIVORSHIP RIGHTS.Thank you for your time!!!
SPIC is supposed to protect the assets of your investment account.How far that goes with options traders (and short sellers) is a good question.Market reversals can result in margin calls which authorize the broker to sell your position to protect its assets. But in a fast changing market they can still have losses. That is the main reason you need insurance.
'prash, If you make a losing trade using borrowed money --as that idiot Cordier did-- the clearing house will require you to pay the loan, which is what you agreed to when you opened the account with them. So, obtaining 'personal asset protection' is easy. Don't make bets you can't afford to lose. Arindam
SPIC asset protection, is more of if the brokerage company goes bankrupt, SPIC will pay back your assets. But it will not protect you against any margin debit balance, or losses which are caused by your own decision.
Best Of |
Favorites & Replies |
Start a New Board |
My Fool |