I just woke up literally to a margin call from risk management

by Adderalin

Account: i.imgur.com/TPFvsQ6.jpg

Was a $400k equity portfolio margin position that I bought $3.2m total of UPRO and TMF on, two 3x leveraged ETFs. 55% UPRO 45% TMF. I just rebalanced gains from TMF into UPRO and it now blew up.

I walked risk management through the positions. The SPX position is a short box spread financing the margin for the position. The other two positions are risk parity positions that I explained to him was much safer than the 100% stocks and less correlation than a 50/50 stock bond portfolio.

His response: Your “safer” portfolio just caused a $276k margin call.

Risk management is going to reevaluate their bond/stock correlation offsets both in general and for 3x levered ETFs.

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Anyways, I’m a bit off the hook. Since the margin loan is due to the market by 16 dec 22 and I’m getting 15k/mo tax free disability, risk management was nice enough to give me a 5 day portfolio margin call to bring the account back up to 100k positive equity. If not, the UPRO/TMF positions are liquidated, SPX remains, and I have until the date the short box spread is due. At that time I’ll have a full margin call when the brokers account is on the hook. I’m down to “risk reduction only” trades.

I had to provide proof by sending in pay stubs that I really am getting $15k/mo in tax free disability insurance pay.

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So I’m going to pray portfolio goes up, otherwise whoever the fuck on the other side of my SPX box spread lending me 2.8 million at 0.85% APR to gamble on stocks is going to wish they bought US treasuries instead.

TL;DR what strike/ underlying

Go for puts on my broker TD Ameritrade or their new owner Charles Schwab. $AMTD or $SCHW. Say $20 puts.


Disclaimer: This information is only for educational purposes. Do not make any investment decisions based on the information in this article. Do you own due diligence.