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Main => General Discussion => Topic started by: Chuckone on September 06, 2015, 05:03:39 pm

Title: Margin called on bitUSD short while expired - What happens?
Post by: Chuckone on September 06, 2015, 05:03:39 pm
Hey,

Got a quick question for those of you who know very well the market engine rules.

I shorted a small amount of bitUSD in mid-July and my short expired in August. I decided to let it ride the order book instead of covering or rolling it over. But then the price dropped, causing my collateral to fall below the required amount. If my short hadn't been expired I would have been margin called, but it appears that because it was expired, it stayed on the order book at feed price.

Was I margin called, or since it was expired it wasn't what happened? Will I have to pay the 10% penalty for being margin called? Now that the price has risen significantly (right now the BTS value is higher than when I initially shorted), am I able to simply buy back the bitUSD and keep the BTS profits for the short?

Thanks for the answer!
Title: Re: Margin called on bitUSD short while expired - What happens?
Post by: lafona on September 07, 2015, 12:42:19 am
From what understand you short went into the massive buywall at the feed price when it expired. If the feed price went above your call price, then your order would execute at up to 10 percent above the price, representing a ten percent penalty. Afaik that penalty should only occur if your price is still lower than the feed price. Otherwise your short is just part of the buywall at the feed price.

So yes you should be able to buy back for a profit assuming nobody took advantage of the ten percent discount when your short was margin called.
Title: Re: Margin called on bitUSD short while expired - What happens?
Post by: liondani on September 07, 2015, 01:04:43 am
then 10% penalty doesn't exist right now i think!
Title: Re: Margin called on bitUSD short while expired - What happens?
Post by: Chuckone on September 07, 2015, 01:06:42 am
Quote from: lafona on September 07, 2015, 12:42:19 am
From what understand you short went into the massive buywall at the feed price when it expired. If the feed price went above your call price, then your order would execute at up to 10 percent above the price, representing a ten percent penalty. Afaik that penalty should only occur if your price is still lower than the feed price. Otherwise your short is just part of the buywall at the feed price.

So yes you should be able to buy back for a profit assuming nobody took advantage of the ten percent discount when your short was margin called.

Thanks for the answer! My order is probably still in the buywall, as I can still cover my expired short. Got lucky I guess!
Title: Re: Margin called on bitUSD short while expired - What happens?
Post by: mf-tzo on September 07, 2015, 11:48:16 am
I think the reason your expired short is on the buy wall still and you can still cover is because  people are selling bitusd @ +20-30% premium and few people actually do pay for +20% premium to buy those bitusd. If people stop buying bitusd at premium and people start selling bitusd at the peg I think then your short will get covered and you end up paying the 10% penaly? Maybe some others can confirm if what i am saying is right since I always forget the rules of the game..
Title: Re: Margin called on bitUSD short while expired - What happens?
Post by: liondani on September 07, 2015, 03:06:18 pm
Quote from: mf-tzo on September 07, 2015, 11:48:16 am
I think the reason your expired short is on the buy wall still and you can still cover is because  people are selling bitusd @ +20-30% premium and few people actually do pay for +20% premium to buy those bitusd. If people stop buying bitusd at premium and people start selling bitusd at the peg I think then your short will get covered and you end up paying the 10% penaly? Maybe some others can confirm if what i am saying is right since I always forget the rules of the game..

agreed, except the 10% penalty part... (it doesn't exist anymore I think)