Amarin Corp Plc (AMRN)

[amarinbullfromchicago]

A large HF will generally get out of their position before a margin call, risk management is pretty intense since HFs are struggling so much just to match S&P returns these days. That’s why Melvin was such a big story, they obviously had poor risk management and a huge ego.

For a large market maker, usually self imposed risk limits will kick in before an actual margin call. But the main thing that will squeeze them out is the borrow rate. Because they get such good margin/leverage, huge changes in correlation can lose them big money fast if they have thousands of positions on. Any huge market maker will have verrrry little margin requirements since their true objective should be to trade flat, only taking home a small % of residual positions vs their actual trading size. That’s why a lot of market making firms will embed large trading teams and hide the risk to look like it’s all bundled together. Better margin usually equals better returns...until you blow out haha