How to Price and Trade Options. Sherbin Al

recouped around 93 percent of their money from the firm.

      On July 10, 2012, Peregrine Financial (also known as PFGBest) filed for bankruptcy. Unlike MF Global, Peregrine went bankrupt for a much more nefarious reason. Their CEO, Russell R. Wasendorf Sr., admitted to embezzling money from customer accounts over a period of 20 years. How did he get away with it for so long? He became very adept at forging bank statements, and he set up a false address for a bank so that NFA (National Futures Association) regulators thought they were receiving “proof” of his accounts. In truth, he was forging inflated bank statements to hide his embezzlement and was fraudulently creating false statements on a daily basis for regulators. For his efforts, after a failed suicide attempt and a guilty plea, Wasendorf received a 50-year jail sentence, the maximum allowed by law.

      Once again, my goal here is not to frighten you, but rather to make you aware that you need to do your due diligence when choosing a brokerage firm. Fortunately, with each “failure,” regulators learn more and become more adept at their jobs. Personally, I have not lost one second of sleep about the safety of my funds in the brokerages with which I currently have accounts.

Account Types

      Though there are various ways to break down account types, I will stick with the three types that are applicable to options trading. So, for our purposes, we will categorize accounts as the following:

      1. Cash

      2. Reg-T Margin

      3. Portfolio Margin

      Cash Accounts