10 ms·
What happens if you over leverage and end up owing your broker after a bad trade and you can't pay it back..
by joshbaptiste 6y ago
What happens if you over leverage and end up owing your broker after a bad trade and you can't pay it back..
- anitil 6y agoFor you? Bankruptcy. I imagine the broker would have insurance.
- joshbaptiste 6y agook, something the poor kid could have bounced back from after a few years of bad credit etc... dam sad.
- loremipsium 6y agoIn my understanding in buying options you can only lose the premium you pay upfront. Selling options however you can get burnt.
- DudeInBasement 6y agoDepends. You can sell a in money call, and buy 2x out of money calls. You only lose if the asset's price falls between your sell/buy. The point is selling isn't bad. Its not managing risk that kills you. And for this poor dude it did.
- odiroot 6y agoI'm surprised there's no enforced margin.
- tschwimmer 6y agoThe broker is on the hook. In one case the broker rebated the customer but I suspect most of the time they'll try to collect through regular debt collection channels. Example: https://markets.businessinsider.com/commodities/news/oil-trader-loses-millions-on-brokerage-glitch-2020-5-1029186688 https://markets.businessinsider.com/commodities/news/oil-tra... As the saying goes: If you owe the bank $100 that's your problem. If you owe the bank $100 million, that's the bank's problem.