Re: 700% financing charges on a self funding portfolio
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This person is mixing many different things in his/her last response probably trying to change the subject so I see a reason to not respond to them.
For those who may get confused by this thread, no person (non registered company) can issue dividend to another person. Only registered corporations can issue dividends.
On Tue, Aug 10, 2021, 11:19 AM G-Money < dgre420@...> wrote: Bruce, you couldn¡¯t be more wrong. Please do a bit of research before dangerously misinforming folks¡ if you were a registered rep, you could literally go to prison/be fined/barred from the industry by saying stuff like this: "person who is short never have to pay a dividend¡± - so please!!!!!! Do your homework before providing information.?
No, long & short are NOT both purchases.? No, short does not involve using your margin loan - meaning, you DO NOT incur margin loan interest when you short stock. You may incur borrowing fees, but these are NOT, I repeat NOT the same as your margin loan interest.? Yes, you CAN take out margin loan to buy property, it¡¯s called collateralized lending/non-purpose loans, etc¡? YES YES YES - you will 100%, absolutely pay the dividend out of your own pocket when you are short stock that pays dividends and you are SHORT at the start of the day on EX-DATE, i.e. if you short the day before ex-date; irrespective of the session. This happens ALL THE TIME and people lose out hundreds of thousands of dollars for not knowing that their ITM short calls could get called away, leaving them short the stock into ex-date and they then having to pay the dividend because, among other things, the premium of the corresponding put is smaller than the dividend amount.?
When margin is activated (money is borrowed) interest starts accruing regardless of how you use that margin loan. It can be to purchase a long or purchase a short position. Both long and short are purchase transactions. In both cases daily interest fee accrue. Also, there are no other ways to borrow margin. User must go short or long. For example can't take out the margin loan to buy a property.
Also, I *think someone earlier said those with short position must pay dividend to whomever they borrowed from. This is mot correct. Dividend is paid by the corporation and rules for who gets that dividend is clearly stated on IBKR. So, person who is short never have to pay a dividend on behalf of a corporation to someone else. On Tue, Aug 10, 2021, 10:26 AM G-Money < dgre420@...> wrote: One issue at hand here which I don¡¯t think anyone has explicitly stated is that short stock credits do not offset margin debits. And usually, not sure if this is the case with IB (I only trade futures and an IRA portfolio), retail brokers don¡¯t pay margin interest credits to short stock (they do on short option credits). So even if you were net zero cash (your total shorts offset your total longs cash-wise) you would still incur margin debit charges on the full amount of borrowed cash for your longs.?
Again just to clarify, short stock does not offset margin debit balances.
? IBKR does NOT convert currency at each trade. It puts a negative position on account for that currency and its up to user to fill it whenever they like or never do and simply sell the asset to fill it. So this shouldn't always add to fees as it might also work in favour sometimes by forex movements. On Tue, Aug 10, 2021, 3:51 AM Francois G via ??<namasteparis= [email protected]> wrote: You should also pay attention to the 'Base currency' set up in your account. If you trade US products, you MUST set the base currency to USD. Or else, you'll pay currency conversion fees at EACH trade. That's how I got a huge fee bill to pay when I stepped in the game.
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