I trade using Datek and when a stock is non-marginable, their
web pages display an NM next to the quote. I've seen the NM
next to AXC disappear when the price has gone over $5 and then
reappear when the price has been pushed back down, as happened
last week. This indicates to me that rather than Datek having a conservative requirement of the price exceeding $5 for several
days in order for a stock to be marginable, they have a simple
limit in their software.
I looked in the on-line help on the Datek site trying to find
a policy, if any, on marginability. I couldn't find any so far,
but in their Glossary, I found this interesting definition:
NM Abbreviation for Not Meaningful.
Damn! So that's why my investment did so poorly for so long!
AXC was simply not meaningful.
But to return to the topic of the magical $5 price boundry, if
the price continues to hover there, I can imagine that the
volatility could be exacerbated. The stock goes above $5 for
example and some Datek investor loads up on the margin. It drops
back below and the investor gets a margin call, and is forced
to sell (at a loss, no less).
If this really happens, we'd be better off with a stock split
to get the price down in the $2 range again. |
