The trading halt for Silicon Valley Bank and Signature Bank created hurdles for traders who had bet that the stocks would fall.
led to halts for the stocks — at $106 per share for SVB and $70 per share for Signature.
Logically, that trade should have been a big winner, but Davies' options were technically out of the money, based on the last traded price — that is, the share price at the time was above his $50 strike price — and the stocks were now illiquid. The put options were set to expire on March 17.Shares of Signature Bank were halted for about two weeks in March.
"In hindsight, I should have bought puts on First Republic or something ... First Republic traded all day on Monday [March 13]. I just happened to trade the one that was shut down — which should have been the best hedge, but it turned out to be the worst hedge," Davies said on March 15, when he thought his options would expire before he could exercise them.
Scott Sheridan, the CEO of tastytrade, said the OCC's decision meant the firm had to work with customers individually to help close out their positions. Additionally, Sheridan said that there are regulatory minimums for margins that brokerages have to impose on short positions, and that sometimes additional margin is necessary for risk management for the firms — not a way to generate more profit.
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