Volatility triggers a reduced margin elibilityThere are several triggers for the volatility of VMD stock. One important trigger is the quarterly setting of margin eligibility by IIROC. They input factors include total capital, trading volume, share price and recent volatility of the stock and prepare a report. The most recent report was issued Aug 5, 2022 with an effective date of August 26.
https://www.iiroc.ca/list-securities-eligible-reduced-margin-lserm
VMD had been at a low margin eligibility of 50%. However effective today, August 26, it was reduced to 25% at some, if not all brokerages.
I suspect there are traders using these announcements who take advantage of the margin reduction between the date the report is released and the date that it is effective. This may have been partially responsible for the sell off since August 5.
VMD share price would be far less volatile if management were to provide forward looking guidance that extends out 12 months. That guidance might also benefit management to keep to budgeted spending and share-based compensation awards to ensure targeted expectations are met. The SGA spending in Q2 was certainly a surprise to analysts.
Since June 30, VMD's share price has had further volatility with their earnings announcement. This will undoubtedly ensure that its reduced margin eligibility will stay until at least the end of the year. The next IIROC announcement is early November.