“As I write this, Apple (AAPL) is taking a straight down 4% beating in the market,” Paulo Santos writes for Seeking Alpha. “This has come out of the blue and is rather rare for Apple when there are no news and the market itself was rather stable.”
“At this point, the most plausible explanation is not very reassuring. It seems that COR Clearing is increasing Apple’s margin requirements to 60% from 30% due to excessive concentration,” Santos writes. “This is supposedly leading to mechanical selling to re-establish maintenance margins of leveraged traders.”
Santos writes, “Over the short term and until excessive speculation is wrung out of Apple, the stock is likely to remain pressured. This latest move to increase margin requirements should already take care of most leveraged speculation, while the call option speculation has ceased a while ago as well, so the process is well advanced now. Once this temporary excessive-sentiment related phenomenon is over, Apple will be able to go back to reflecting its own fundamental prospects, namely those affecting the iPhone 5 and the iPad.”
Read more in the full article here.
Over at Baron’s, Tiernan Ray reports, “There was also a brief item from the staff at StreetInsider this morning stating that some clearing firms are raising margin requirements for clients that trade in Apple, without citing sources. CNBC appears to be making the margin requirement argument as well.”
“Laurence Balter, principal with Oracle Investment Research, who this morning raised his rating on Apple to Strong Buy, tells me in a brief email communication that, indeed, he believes the swoon this morning is a consequence of greater margin requirements by some firms as a consequence of the rogue trader at Rochdale Securities back in October,” Ray reports.
Read more in the full article here.
Related articles:
Former Rochdale Securities trader arrested in fraud scheme involving Apple stock – December 4, 2012
Apple’s stock has the flu; FBI probing rogue trader at Rochdale Securities – November 6, 2012
Rochdale said to seek capital lifeline after AAPL trading error – November 2, 2012
