Bob,
I think the concern is not for the investor's own good, but for the brokerage firm's own good!! They are covering their butts, (|), and are simply trying to insure that you do not sue them when your equity goes to zilch, and you call up an attorney to nab them for "allowing" you to be so foolish with your money!
There are many law suits pending among the firms, in which investors are litigating because their brokers "let" them trade penny stocks, or play options when they didn't know what they were doing...and even winning these suits, despite having signed a release prior to being approved for options trading. So, you see, they want to be sure that anyone playing options has the financial means to tolerate excessive losses through such speculative options trades.
Remember though, with buying common stocks that tank, you still have something left unless the company goes bankrupt! With options, the risk is highly intensified as there is an expiration date involved! So, your long position could come back in the future, but once expiration comes & goes, if the stock didn't do what you wanted it to do, you may have lost the entire premium.
Good luck to you all.
Vicki |
