By Matthew Schultz


In a move that has left its customers furious and baffled, TD Ameritrade shut down its users ability to trade as early as Tuesday 1/27/2021. On Wednesday 1/28/2021, Robinhood and other firms restricted stock buying and options trading in response to the big short squeeze egged on by Reddit users of r/wallstreetbets. The squeeze pushed GameStop $GME to well over $400 on Wednesday.

Joe H., a TD Ameritrade user and former full time trader at the Chicago Mercantile Exchange described how he was unable to sell covered call. According to investopedia, a covered call is a financial transaction in which the investor selling call options owns an equivalent amount of the underlying security. To execute this an investor holding a long position in an asset then writes (sells) call options on that same asset to generate an income stream. The investor’s long position in the asset is the “cover” because it means the seller can deliver the shares if the buyer of the call option chooses to exercise.

According to Joe,

“I got a lot of shares of Nokia, back from when it used to be Lucent,” said Joe. “I’ve been waiting for this thing to go up for years. Then on Tuesday it shoots up like a rocket with 500% volatility. I sold a lot of calls against it, trying to lock in a good price and make some money. I kept a bit in reserve though just in case, but in the afternoon it really shoots up, so I go to sell some January 29 calls against it.”

“I enter in the trade, then the machine shoots back at me saying its restricted. It tells me that its a hard to borrow stock. I didn’t make any sense. I owned the stock for over 20 years, what does it matter if it’s hard to borrow if I already own it?”

“I tried selling the calls 10 times before I just gave up and called. It took me almost two hours to reach someone, and by that time the market was already closed.”

“When the guy picked up, I told him I couldn’t sell any calls, he just said that they couldn’t sell calls for hard to borrow stock. I repeatedly explained to him that I already owned the stock. I didn’t need to borrow anything. He just kept repeating the same thing. When I asked for redress, he told me I could sell the covered call then, but at the time the price that was being offered was shitty. They forced me to hold off selling, and in the end it cost me about $1000”

As of late Wednesday, TD Ameritrade has formally come out to restrict several stocks and their derivatives on the platform. The list includes AMC, CVM, EXPR, FOSL, GME, NOK, BB, BBBY, FIZZ, GSX, IRBT, NCMI, TR, UONE, VIR, NAK, NAKD, DDS, KOSS with the following restrictions:

  • Stocks – 100% holding requirement (not marginable)
  • Long calls and puts are allowed
  • Covered call and short put orders may only be placed with a broker. Please be aware that wait times to speak with a broker may be longer than normal due to current market conditions.
    • Covered calls only allowed if your account currently has the shares
    • Short puts only if you have the maintenance/cash to cover the entire exercise amount of the short puts
  • All other complex options orders will not be accepted
  • We may also implement additional restrictions on the opening of option trades that expire Friday, January 29th

On the 28th Charles Schwab Corporation, who owns TD Ameritrade came out with the following statement on Twitter and not by email for some reason:

However, just under the tweet are angry users complaining of a bug that just so happened to prevent users from trading restricted stocks.

When asked if exotic options strategies included covered calls, Joe had this to say,

“Exotic? Covered calls are one of the most basic options strategies there are. Whoever calls covered calls exotic doesn’t understand options at all.”

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