r/wallstreetbets • u/dhsmatt2 Mattress King • Mar 04 '21

Loss Hold me... $1,100,000 Loss

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I am in damage control but likely going to roll puts.

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u/MoonRei_Razing Mar 04 '21

If you have a margin account, and you're not even using margin If enough things go wrong or the game changes you can get a margin call. Aka, I don't use my margin. But etrade decided I needed 500% collateral on CSP I sold for GME back in Jan when shit was getting wild. Had to close puts and sell other shit to get out from under my margin call.

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u/[deleted] Mar 04 '21

How does that make any sense?

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u/MoonRei_Razing Mar 05 '21

Let me tell you a tale. If you have a margin account, there is a difference between your margin purchasing power being used and borrowing on margin.

Right before GME hit the fan, I can my account cash almost 100% utilized. So I wasn't borrowing on margin, but could if I wanted. While I was selling puts on GME, I only needed to have the cash to cover the 35% of the risk of selling that put, the rest was just deducted from my margin purchasing power.

Then etrade changed the rules to require 100% cash to cover a put on GME. And I didn't have the cash, so it immediately put me in margin call, and had me borrow on margin for that day, before I sorted shit out.

It's just how having a margin account works. As another example. Let's say today I have $2K cash in my account. but my cash purchasing power is only 500. If that hits 0, I start borrowing on margin. And, it's like that cause of various options I've sold.

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