Question

What are SogoTrade's option trade commissions?

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Answer

Options Commission Schedule

Online $4.88 plus 50¢ per contract
Broker-Assisted Trade $25.00 plus 50¢ per contract

Sample Option Trade Commissions

5 Contracts $7.38
10 Contracts $9.88
25 Contracts $17.38
50 Contracts $29.88
Question

What are SogoTrade's option trade spread commissions?

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Answer

SogoTrade charges only one ticket charge ($4.88) + .50 per contract on legitimate spread orders.
This is in contrast to many of our peer platforms that charge multiple ticket charges for spread orders.

Question

How do I add options trading to my account?

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Answer

If you aren’t currently approved for Options trading and would like to add this capability to your account, you can easily apply for such privileges via:

1. My Account/Account Profile and select : Margin / Options Upgrade
or
2. My Account/Margin Options Upgrade and select : Margin / Options Upgrade

You will receive an email notification, usually within 1 business day of the decision regarding your account.
Please contact us if you have any additional questions. You can email us at Options@SogoTrade.com or call us at (646) 885-6486, Monday through Friday, 7:00 AM to 9:00 PM ET.

Question

How do I add Margin trading to my account?

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Answer

If you aren’t currently approved for Margin trading and would like to add this capability to your account, you can easily apply for such privileges via:

1. My Account/Account Profile and select : Margin / Options Upgrade
or
2. My Account/Margin Options Upgrade and select : Margin / Options Upgrade

You will receive an email notification, usually within 1 business day of the decision regarding your account.
Please contact us if you have any additional questions. You can email us at services@sogotrade.com or call us at (646) 885-6486, Monday through Friday, 7:00 AM to 9:00 PM ET.

Question

What is a Margin Call?

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Answer

Margin Call There are two types of margin calls and both involve a demand from a broker / dealer to either deposit additional equity (in the form of a cash deposit or marginable securities with sufficient loan value) and / or to close enough existing positions to satisfy the call. The first type of margin call occurs when a new position is opened with insufficient overnight buying power. This is known as a Federal or Reg T (RT) call. The second type of margin call involves total equity which is no longer sufficient to maintain the positions that have been opened. This is known as a Required Maintenance (RM) call.

Overnight Buying Power (ONBP) The amount of funds you have to open a new position and hold it overnight. In the majority of cases, beginning of day ONBP is based on two times your maintenance excess (equity – equity requirement). Closing positions can increase your ONBP intraday. It is sometimes referred to simply as ‘Buying Power’.

Day Trade Buying Power (DTBP) The amount of funds you have to place day trades. Beginning of day DTBP is 4 X margin maintenance excess from the end of the previous day. This figure cannot be increased intraday, and is fixed at the start of the day. Closing positions opened that day will replenish DTBP, but never greater than the start of the day DTBP. Closing overnight positions will not replenish DTBP.

Required Maintenance (RM) Call This type of Margin call is the most common type issued. It occurs when the value of the security moves against the customer (price drops when long the stock or price increases when short the stock). All securities have a margin maintenance requirement (25%, or more stringent, up to 100% of the market value), and this type of call simply means that the current equity in the account is no longer sufficient to satisfy the total maintenance requirement of all the positions held. The call can be met in many ways. (1) You can deposit money in the amount of the call. (2) You can deposit securities valued at 1 1/3 times the amount of the call. (3) You can close marginable securities at 4 X the amount of the call. (4) You can sell non-marginable securities at the full amount of the call. Or, (5) the value of the marginable positions move in the account’s favor to the point there is no longer maintenance call. This call is also referred to simply as maintenance call.
Hypothetically, let's say you purchase $20,000 worth of securities by paying $10,000 yourself and borrowing $10,000 from SogoTrade. If the market value of the securities drops to $15,000, the equity in your account falls to $5,000 ($15,000 - $10,000 = $5,000). Assuming a maintenance requirement of 25%, you must have $3,750 in equity in your account (25% of $15,000 = $3,750). So, in this example, since the $5,000 of equity in your account is greater than the maintenance requirement of $3,750, you are not in a maintenance call. But let's say the maintenance requirement is 40% instead of 25%. In this case, your equity of $5,000 is less than the maintenance margin of $6,000 (40% of $15,000 = $6,000). Here, you would be issued a $1000 Maintenance Call. SogoTrade will use best efforts to notify you; however, if you don’t meet the call, we have the right to close positions at our discretion to satisfy the call.

Reg T (RT) Call This type of margin call occurs when you open a position that exceeds your overnight buying power and then hold that position overnight. This call is a request for you to deposit additional equity to prove to the Fed you had the financial capacity to establish such a position. Reg T Calls can only result from opening transactions. Unlike a Required Maintenance call, equity depreciation cannot generate a Fed Call. Fed calls should be met with a new deposit, rather than by closing positions; although closing sufficient positions will satisfy a Reg T (Fed) call. If you close a position to meet a Reg T call, a Liquidation Violation may be charged to the account. These are also known as ‘strikes’. At SogoTrade, you are given 3 ‘strikes’ in your margin account before a 4th one would restrict the account to liquidation only for a 90 day period. Just remember, you can be charged a Liquidation Violation if you sell/close a position to cover a Reg T Call. This call is also sometimes referred to as a Federal (Fed) call. Hypothetically, let’s say you deposit $5000 cash to fund your account. You now have $10,000 ONBP and $20,000 DTBP (4 X your maintenance excess, as you have no positions in this example). You then place an order to buy 1000 shares of XYZ @ $15 per share and hold the position overnight. The principal amount is $15,000. You have overspent your ONBP by $5000, and would be in a $2500 RT Call ($15,000 X .5 = $7500 requirement). You can meet this call by depositing the entire amount in cash, or you could deposit securities with a value twice the amount of the call to meet it. Just remember, you can be charged a Liquidation Violation if you sell/close a position to cover a Reg T Call.

Day Trade Call (DT Call) A Day Trade Call occurs when there is insufficient Day Trade Buying Power (DTBP) to satisfy initial requirements on day trade transactions. This means you have exceeded (overspent) your beginning DTBP for the day, and then day traded (didn’t hold the position overnight). Day Trade calls can only be met with a deposit of new cash (or fully paid securities). You cannot sell securities to meet this type of call. New monies deposited to meet a DT call must stay in the account for at least two business days before withdrawal (at Sogotrade, if made by ACH, there is a 5 business day hold).

Hypothetically, let’s say you start the day with $5,000 of ONBP and $10,000 of DTBP. You then close $15,000 of a marginable position. Now you have $20,000 ONBP and the DTBP remains at $10,000 (note that your ONBP exceeds your DTBP in this scenario). You then place an order to buy 1000 shares of XYZ stock at $15 per share. The principal amount for this trade is $15,000. You have overspent your DTBP by $5000, but you have not exceeded your ONBP. In this case, if you were to sell the position that same day, you would have a $5000 DT margin call, since you overspent your initial DTBP and then day traded. If you were to hold the position overnight, no DT call would be issued.

Equity Maintenance (EM) Call An EM Call occurs when the equity in a Pattern Day Trader (PDT) account (see section on Day Trading) falls below $25,000. The EM call is the additional equity required to get the PDT account back to the required $25,000 so day trading can be permitted again. This call can be appreciated out of or a deposit of cash and / or securities in the amount of the EM call can satisfy it. A Margin account with 4 or more day trades in any rolling 5 business day period is considered ‘pattern’. If a PDT account begins the day with less than $25,000 equity and executes a day trade, the account will be closed at the clearing firm and restricted to closing transactions only for 90 calendar days. There is no way to lift this restriction. For example, depositing funds or closing positions cannot reopen a PDT account closed for day trading while the equity was below $25,000. While in an EM call, the account can still use the overnight buying power to open a new position and hold it overnight.

Good Faith Violation (GFV) This type of violation occurs in Cash Accounts ONLY. We are listing it here for informational purposes, as investors sometime get several of these before they decide for themselves that a margin account may actually suit their trading habits better. A GFV is issued when a position is opened using unsettled funds and then closed before the funding sale has settled. Settlement for a stock trade is trade date plus two business days. An easy way to remember this is T + 2. Settlement on option trades are T + 1. Customers can receive 4 GFV’s in a 12 month period; however, they should try to be avoided in the first place. When an account is issued its fourth GFV within that timeframe, the account will be restricted to settled funds only (intraday sales will no longer increase overnight buying power) for one year. A fifth violation will result in the account being closed (restricted to liquidations only).

Hypothetically, let’s say on Monday, April 10, a customer sells 100 settled shares of XYZ stock which generates proceeds of $5,000. This sale will settle on T+2, which is Wednesday, April 12. He then uses those unsettled funds to purchase shares of ABC. On Tuesday, April 11, the customer sells the shares of ABC (that he is now selling before the funding sale of XYZ from April 10 will settle on the 12th). This customer will be issued a Good Faith Violation because he didn’t hold the purchase made with the unsettled funds until the original XYZ sale had settled.

Some Margin account risks… and tips to avoid Margin Calls.

Cross reference these points with our Education section on ‘Summary of Key Facts to Understand’


Also of importance, you don’t have to maintain a debit balance when you utilize a margin account. You do not have to take advantage of any extra buying power, greater than your cash balance offered. You can choose to ignore the extra buying power and only trade within your cash balance. Only debit balances held overnight will be subject to margin interest.

It is important that investors take time to learn about the risks involved in trading securities on margin, and investors should consult their brokers regarding any concerns they may have with their margin accounts. See more at: http://www.finra.org/investors/purchasing-margin-risks-involved-trading-margin-account .

Question

Where can I learn more about options trading?

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Answer

For information on options fundamentals and options trading, please visit our options education center.

Question

What are the options trading levels for margin accounts?

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Answer


Options Strategies Available:

Level 1 Covered calls, including:
Covered calls sold against stocks held long in your brokerage account

*Minimum Equity/Margin Requirement:
A margin or cash account is required to place Level 1 trades. No additional margin requirements.

Level 2- All Level 1 strategies, plus:
Married puts
Long calls
Long puts
Long straddles
Long strangles
Covered puts (short stock and short put position)

*Minimum Equity/Margin Requirement:
A margin or cash account is required to place Level 2 trades. No additional margin requirements

Level 3- All Level 1 and 2 strategies, plus:
Equity debit spreads-
Equity credit spreads

*Minimum Equity/Margin Requirement:
A margin account and a minimum equity of $2,000 are required to place Level 3 trades.

Level 4 -All Level 1, 2, and 3 strategies, plus:
Naked equity puts

*Minimum Equity/Margin Requirement:
A margin account and a minimum equity of $5,000 are required to place Level 4 trades.

Level 5- All Level 1, 2, 3, and 4 strategies, plus:
Naked equity calls

*Minimum Equity/Margin Requirement:
A margin account and a minimum equity of $5,000 are required to place Level 5 trades.

Level 6- All Level 1, 2, 3, 4 and 5 strategies, plus:
Naked index calls
Naked index puts

*Minimum Equity/Margin Requirement:
A margin account and a minimum equity of $5,000 are required to place Level 6 trades.


Question

What are the options trading levels for cash accounts?

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Answer

Options Strategies Available:

Level 1 Covered calls
Level 2 Level 1 strategies plus long option positions

Question

What determines the option trading level for which I can be approved?

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Answer

The determination of which options level is suitable for you is based on the financial and personal information provided on your options account application or options upgrade application.
Please make sure to update accurately the Primary User Investment Information/Options Experience.
There are six options levels—1 through 6.
Level 1 is suitable for the conservative options investors while level 4-6 is reserved for the most aggressive / risk tolerant option investors. There is a $5,000 minimum equity requirement necessary for SogoTrade customers to receive level 4 or higher options level approval.
Approval is based on our review and discretion and may be different from the option trading level requested.

Question

When will my deposited funds be available for trading options?

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Answer

Funds availability depends on the method of funds transfer.

Wire Transfer 1 business day after receiving the funds. Please call to have a wire deposit credited the same day.
ACH Electronic Transfer 3 business days after submitting deposit request.
Note:
(1) If the deposit is submitted after 1:45PM CST, the available time needs one more day.
(2) If the deposit is less than the current total account equity and submitted by the cutoff, the funds will be available the next business day.
Check deposit 1 business days after receiving the check
Question

What are the margin and account requirements necessary to receive the different levels of option trading approval?

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Answer

Funds availability depends on the method of funds transfer.

Level 1 $0 minimum initial equity requirement
  No additional margin requirements
Level 2 $0 minimum initial equity requirement
  No additional margin requirements
Level 3 Level 3 strategies require a margin account
  $0 initial equity requirement.
Level 4 Level 4 strategies require a margin account
  $5,000 initial equity requirement
Level 5 Level 5 strategies require a margin account
  $5,000 initial equity requirement
Level 6 Level 6 strategies require a margin account
  $5,000 initial equity requirement
Question

What is SogoTrade's options exercise policy?

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Answer

Customers that exercise a long option contract will pay the full aggregate exercise price provided for by the option contract. We will accept exercise instructions for same-day execution on business days prior to 4:30 p.m. EST for index option contracts, and prior to 4:30 p.m. EST for equity option contracts. On the business day preceding the expiration date for any particular option contract, we'll accept exercise instructions until 5:00 p.m. EST.

To exercise an option, please contact customer support at 1-888-709-7646 with your instructions.
There is a $15.00 charge for exercises and assignments.

Automatic Exercises:

All expiring equity and index options that are at least $0.01 In the Money (ITM) will be eligible for automatic exercises at expiration—after market close on the expiration day — however, SogoTrade may or may not exercise your option automatically. We may need to contact you for further instructions. If we are unable to reach you, we may not be able to proceed with the exercise. In some instances, there may not be enough equity in the account to make full settlement on the terms of the option. In others, not all ITM options have economic value and their exercise would not be in your best financial interest.

Please see the OCC's expiration calendar at:
http://www.optionsclearing.com/about/publications/expiration-calendar.jsp
There is a $15.00 charge for automatic exercises and assignments.

Do Not Exercise (Contrary Exercise) Instructions:

In order to prevent the exercise of an automatic option on expiration, please contact customer support at 1-888-709-7646 and provide your instructions.
Please note that Do Not Exercise instruction can only be accepted on expiration date.

Exercise (Contrary Exercise) Instructions:
In order to prevent the expiry of a non-automatic option on expiration, please contact customer support at 1-888-709-7646 and provide your instructions.

Question

What is SogoTrade's option assignment policy?

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Answer

SogoTrade allocates the assignment of exercise notices among short positions according to an automated procedure. This procedure randomly selects from among all short option positions (including positions established on the date of assignment) those contracts that are subject to exercise.
All American-style short option positions are liable for assignment at any time. The assignment process may result in multiple partial assignment and/or multiple transactions to fulfill a single assignment, and a separate commission charge will apply to each partial assignment or transaction needed to complete an assignment.

Question

How much does SogoTrade charge for option exercises and assignments?

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Answer

There is a $15.00 charge for exercises and assignments.

Question

In what increments do options Trade?

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Answer

Options normally trade in increments of 5 or 10 cents depending on the value of the underlying.

However, The SEC has requested that the options exchanges commence a pilot to trade options in one cent increments. This program will continue to expand through out the year.

Here is the list of eligible underlyings:

https://www.cboe.org/publish/PennyPilot/PennyPilotClasses.csv

The pilot allows for trading increments of one cent for bids/offers up to $3 and 5 cents for bids/offers above $3, for each of the symbols in the pilot except for QQQQ. The symbol QQQQ will trade in one-cent increments for all prices.

Each exchange either has filed or will file rules that describe the trading increments for the pilot stocks, changes that result from one-cent increments, various reports to measure the impact of the pilot, and plans for quote mitigation.

Question

Do I need to take any action on expiration day if my expiring options are In-the-Money (ITM)?

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Answer

For long option positions, automatic exercise will occur for all equity options in the money by $0.01 or more.
For short option positions, you have no control over assignment. The only way to avoid assignment is to trade out of the position before the expiration of that contract.

It is very important if you have positions that are ITM that you keep a close eye on these positions and understand what your choices are for these options on Expiration Day:

Choices:
• You can proactively close the option position. In order to avoid a possible margin call for an exercised or assigned position(s) that would exceed your buying power after expiration, you should take market action by Expiration Day 3PM ET to close out that position.
• You can decide to keep the position open if you have adequate buying power available to take possession of the resultant long or short underlying position.
• You also can submit a Do Not Exercise (DNE) instruction on any of your in-the- money options. Do Not Exercise Instructions: In order to prevent the automatic exercise of an option that is In-the-Money, please contact customer support at (646) 885- 6486 and provide your instructions. Please note that Do Not Exercise instruction can only be accepted on expiration date.

Question

What happens if there isn’t enough equity to cover the resultant equity position of an expiring ITM Option?

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Answer

During expiration days, SogoTrade closely monitors all expiring option positions. If you do not manage the expiration risk in your account prior to 3 PM ET, SogoTrade reserves the right to buy, sell, or otherwise close positions to manage the risk in your account.

Actions Include:
-SogoTrade may close out the position on your behalf
- SogoTrade may enter a Do Not Exercise (DNE) instruction.
- SogoTrade may initiate closing stock trades in the after-hours market to cover any resultant position.

Usually we will allow a client to take action in their own account by 3:00 PM ET if we are alerted in a timely fashion.
If SogoTrade has to take action above the normal course of action, we may charge a $75 ( base rate ) Plus $50¢ per contract options management mitigation fee.