posted
Allright, this is confusing me, maybe someone can explain what is happening to my account...
Lets pretend I owned 250,000,000 shares of company "X". Company "X" crashes, i lose most of my money, and the stock is dead for several months. Company "X" then has a 600:1 reverse split and is renamed to company "Y". That would leave me with 416,666 shares.
Lets pretend I wanted nothing to do with company "Y", because i lost most of my money, and I therefor sold all 416,666 shares as fast as possible after the reverse split just so i could recoup a few thousand dollars (since the stock was dead for months - i just wanted to get away).
Here comes the fun part...
The next day I open my Etrade account and it says i have a "short sale" on company "Y" of -430,000 shares.
I call Etrade and they explain: I somehow sold more shares than i owned - therefore that amount is on margin and listed as a short sale. And that my account wont clear until the stocks are delivered (who knows how long that could take and that i can lose money if the stock goes up) or i can "buy to cover" and probably make money since the stock has gone down (but if i buy 430,000 shares it will shoot up like crazy).
If i only sold 416k shares, how could i possibly have a higher margin of 430k shares? And if you take 430k shares and you multiply that by 600 = 258,000,000 (just about what i had of company "X".) Are they basically saying every share i sold did not belong to me?
I dont understand...
Posts: 147 | From: Orlando | Registered: Jan 2005
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posted
I have a margin account. Even though its a penny stock and according to etrade rules - you cannot buy penny stocks with margin, everytime i bought, they would mark it under margin and i would have to call/write them to list it as a cash purchase. So it was all bought with funds in my account and not margin.
Except
Before the split i had 249,500,000 shares (around $25,000 at .0001) under my cash account and 500,000 shares under margin - which was only worth $50 (which i accidently bought, so i didnt bother contacting them to change to cash - since it was so small).
Posts: 147 | From: Orlando | Registered: Jan 2005
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posted
In other words, in Etrade there is no margin power with penny stocks. All purchases were done in cash, but accounting/portfolios would mess up and list the purchase as margin and i would have to call to change to cash...
Doesnt explain why i have a -430,000 short sale worth almost $10,000
Posts: 147 | From: Orlando | Registered: Jan 2005
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posted
Its fixed today. I mentioned "I somehow sold more shares than i owned". Yesterday the system had every share i sold on margin, today its just the amount of shares i went over by (which makes more sense), which is just a few shares Posts: 147 | From: Orlando | Registered: Jan 2005
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