FAQ – Kensington Capital

What happens if my equity is not sufficient to meet the margin maintenance requirements?

Your account will be subject to a margin call if your equity does not meet margin maintenance requirements, and Kensington Capital Trading Margin Department will generally attempt to notify you as a courtesy.
Margin calls are due upon creation of the call. Kensington Capital, along with our clearing firm Hilltop Securities, establishes a future due date as a courtesy notice. Kensington Capital in observation of regulatory policy, may sell your securities at any time without consulting you in order to meet the call. Typically, if you do not meet a call by the due date, your account will be considered “In Default” and Kensington Capital may liquidate positions in order to cover all outstanding calls prior to their individual due dates. Depending on market fluctuations, positions may be liquidated for a greater amount than the calls. If Kensington Capital liquidates any of your positions, you will be charged the broker-assisted commission rate.

What happens if I am long a call or put option?

If you are long a call option that is in the money at expiration by at least $0.01, you should expect to purchase the underlying shares at the strike price. If you have insufficient funds to cover the purchase, a margin call will be generated on your account and Kensington Capital may force a liquidation of the position at prevailing market prices.
If you are long a put option that is in the money at expiration by at least $0.01, you should expect to have the underlying shares sold short (unless you are long sufficient shares of the underlying stock) in your account at the strike price. You will be required to cover this position before the end of the trading day following expiration. For instance, if shares are sold in your account Friday, you will be required to cover that position the following Monday before 4 PM EST.

What happens if I am short a call or put option?

If you are short a call (stock option) that is in the money, you may be assigned on any given trading day leading up and to the last trading day prior to expiration day. Assignment to a call writer means you will have to sell the specified amount of underlying shares at the strike price. If this is an uncovered call, you will have to buy the underlying stock in the open market at the current market price so you may sell it to a call buyer at the strike price. If you do not have sufficient buying power to afford such a position, you may receive a margin call which can put you at risk of being sold out of that position.
If you are short a put (stock option) that is in the money, you may be assigned on any given trading day leading up and to the last trading day prior to expiration day. Assignment to a put writer means you will have to buy the specified amount of underlying shares at the strike price. If you do not have sufficient buying power to afford such a position, you may receive a margin call which can put you at risk of being sold out of that position.

RETIREMENT

What type of IRA accounts do you offer?

IRA Retirement Plans

An IRA, or Individual Retirement Account, is a tax-advantaged retirement savings vehicle. Holders of an IRA retirement account may contribute a set amount of money to it each year — the maximum yearly contribution in recent years has been the lesser of 100% of earned income or $6000 for individuals under the age of 50. For individuals over the age of 50, the maximum contribution to an IRA is the lesser of 100% of earned income or $7000. These amounts may change so make sure to reconfirm this information with your tax advisor.
What Types of IRA Accounts Exist?
Many types of IRAs exist, and the type that best suits an individual is dependent on that individual’s age and how much money is needed to retire.
Traditional IRA – contributions to a Traditional IRA are often tax-deductible, meaning that the money that is contributed is done so before tax is deducted. Earnings and transactions on assets held within a Traditional IRA are not taxed, and the money that is withdrawn from a Traditional IRA at retirement is taxed as income.
Roth IRA – contributions to a Roth IRA are done so after tax has been deducted, which is the principal difference between a Roth IRA and a Traditional IRA. Earnings and transaction on assets within a Roth IRA are not taxed. Money that is withdrawn from a Roth IRA at retirement is not taxed (since it was taxed when it was contributed).
Self-Directed IRA – the owners of these IRAs are permitted to make investments on behalf of the plan. A Self-Directed IRA allows the holder to make investments, using money in the IRA account, in a broad selection of investment vehicles, whereas most other IRA types are restricted to a few mainstream investments.
We offer all types of IRA accounts .