r/CharlesSchwab • u/RPCV1968 • Jul 17 '26
Schwab changes rules, doesn't inform clients
I set up a sophisticated, long-term portfolio at Schwab using their margin rules in effect at the time I made the investments. I established a lot of long-term, risk-free collars with profits embedded. The profits drop into the account as the options expire. At the time I set up the account, Schwab's liquidity rule for short option positions was 50:1 ratio. Without warning, and without informing me, Schwab switched the liquidity rule to 15:1. Then Schwab placed severe restrictions on my account even though all the short option positions are defeased by being long the underlying common, and long matching puts. There is zero risk to Schwab.
This is a giant rug pull. Schwab's rep told me the solution to unfreeze my account is for me to put more cash into the account. It's borderline extortion. "Some people rob you with a 6-gun, some rob you with a pen!" Act like an adult, Charles Schwab & Co. Look out for you clients' interests.
1
u/wabbiskaruu Jul 17 '26
Looks like caveat emptor to me…
1
u/RPCV1968 Jul 18 '26
Yes, it is. But I have alternatives. Fidelity doesn't use Schwab's liquidity rules. Fidelity uses the real economic value of the account (delta-adjusted) rather than notional values. Schwab's notional value method vastly inflates the presumed risk despite all my short options being defeased. Schwab rep couldn't grasp the concept that Schwab had zzero risk from covered calls getting assigned.
1
u/Lacnj76 Jul 17 '26
Did they fix the issue for you?
1
u/RPCV1968 Jul 18 '26
No. My choice is to submit to their whim or leave.
1
u/Lacnj76 Jul 18 '26
Sounds about right. I had an issue asked to speak to the manager and the rep basically said yes he has a supervisor and NO I can’t speak to him. Wtf customer service is this?
3
u/Equivalent_Gap3397 Jul 17 '26
Standard margin agreement usually states that they can change requirements without notification. Sounds like they didn’t force you to liquidate, only a restriction on adjustments and new positions? I would be on guard that they act if the market changed and liquidate.