John W Elite    Posts: 654 Joined: 10/11/2012 Location: Sydney, NSW, Australia  User Profile | Recently OV traded a couple of 2X and 3X ETF's and I suddenly had a margin call on my account. I didn't realise that the margin on 2X and 3X ETF's is also 2X and 3X! I was able to adjust for this by reducing the trade size to a half (for 2X ETF's or a third (for 3X ETF's). Then I couldn't get around one other issue. Even though I had established control of the individual margin risk I found that that OV still pushed my trades over the broker account 100% limit because it valued the 2X and 3X ETF's as 1X only. A simple example - imagine you have 5 1X positions at 20% each. Broker Total 100%. Now assume instead there are 2 2X ETF's and 3 1X ETF's. Broker Total 140%. Then using my simple solution the 2X ETF's are forced to half size in OV(10%), therefore they now use 20% broker equity each instead of 40%. The broker sees this as 20+20+20+20+20=100%. So the broker problem appears to be solved. BUT OV looks at this and assumes the 2X ETF's now only use 10% equity. OV sees 5 positions totalling 10+10+20+20+20=80%. OV then tries to fill the remaining 20% account value with another ETF to get to it's 100% account allocation. But that extra ETF takes the broker account from 100% to either 120%, 120% or 120% depending on whether the extra ETF selected was 1X 20%, 2X 10% or 3X 6.67% Anyway, that was my problem, I've managed this by hands on manual calculations and account adjustments to compensate. It would be really good if this aspect could be handled in OV! It may need some intelligence in the symbol list for OV to know the difference between a 2X or 3X ETF. [Edited by John W on 3/24/2016 1:12 AM] | |
