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There have been considerations to up the requirements of purchasing leveraged ETFs, which go up to 3x. But also keep in mind most people can easily be approved
by ve55 7y ago
There have been considerations to up the requirements of purchasing leveraged ETFs, which go up to 3x. But also keep in mind most people can easily be approved to buy options, and easily lose 100% or more of their net work in hours.
- throw17ebfruary 7y ago> ...most people can easily be approved to buy options, and easily lose 100% or more of their net work in hours. How do you lose more than the purchase price of the options when buying options?
- MR4D 7y agoI'm not the OP, but I think they meant "trading options" instead of "buying options."
- kenneth 7y agoMost people who take unlimited-downside positions (like selling option contracts or short selling) on a broker will be limited to losing however much cash on hand they have in liquid markets. Their broker will issue a margin call (ask for further capital to be deposited to cover any further losses), and if no further deposit is made, will automatically liquidate their position if necessary. So you're unlikely to see your net worth wiped out, you'll simply lose the amount you put in to the account to trade with.
- throw17ebfruary 7y agoI wouldn't count on that. The market might move so fast that the broker can't liquidate the account before the balance goes negative. In that case the broker has an incentive to try to extract the amount from the customer (if they can), instead of eating the loss on the negative balance.