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Equity options expire at 4pm est Your clearing firm has to 5:30pm est for an exception, your time to ask for that will vary from firm to firm.

hajimow, I was a market maker on the Amex for many years. I knew someone that bought 200 straddles in an active stock from the trading crowd. He lost money on the trade and some of the MM he bought it from, pointed that out a few times the week of expiration and made it difficult form him to...

MoreLeverage is correct. That tool is very useful. We introduce accounts to IB and other firms. This threat of auto-liquidation near expiration and from liquidity events(That can increase house margin for short periods of time), seem to be the main reason why IB clients choose to move their...

Mudi, Even if the stock is a few pennies OTM, that is no guarantee. You have to be prepared for surprises like this or cover Friday near the close, the short pinned option. It's a cost of doing this type of trading.

Occam is correct. Stay over $25K and you can get as much as 4X during the day and 2X overnight. However this is the max leverage and your broker might not include all securities with that leverage. EG stocks under $5.00.

I think that the majority of the time, for stocks that are not volatile and don't move adversely after the close, there is an extremely high probability that you will get assigned on any option that is a penny in the money. With with stocks that fall under any of the qualifiers, I can't give...

I like the idea of being long/short, with the intent of gaining alpha in both direction. Still hard to implement without a full margin account or options and a lot of homework.

25 years as an options MM trading my own account, running my own broker dealer, was enough. There is no longer an edge in being a local MM, so I left to do something different. I was not taking a negative tone with you, just having a conversation. I'm happy to move on.

It's interesting that you're so negative on the use of options. Did you or a close friend have a very bad experience? Leverage that is inherent from the use of options and futures and options on futures is not right for everybody. You can make the same argument for FX trading. However it's...

In New York we just like to make money. We don't care what you call it or how we get it done. Almost all of my clients trade futures, options on futures and options on equities. Alternative investing is more what we do. We don't do asset allocation, like an asset manager. Those guys do...

I like the term index hugging

Option values always assume a hedge. The difference between parity and the value above is cost of carry of the put and the hedge.

I think if your goal is to replicate the index, because you feel stock picking in general is not a better strategy, then keeping it simple seems best. Pick an index, buy the ETF, and live with the results...period, for that percentage of your assets you want to do that with. Any insurance buying...

You are correct. That makes a big difference. It is all cost of carry.

BS does not work well for this. Use Binomial.

This is assuming a 5.006% interest rate and no early exercise. Maybe a cash settled index options with no early exercise in a retail account would replicate this. In practice, all MM have a better cost of borrow right now than 5%, much better, and any american style option would not be accurate...

An ITM call can be worth a little less than parity if the underlying is so hard to borrow, that being short the call is more beneficial than being long the call,to avoid a reg sho buy in(Your broker is failing on delivery of a short sale). This can also happen in events like a dutch tender offer...

I assume he is saying that margin house rules are high. That is a very broad statement and not always true. I would say that equity and options margin rules are average vs other online brokers while futures margin is higher than most FCMs. I can't compare them to other online brokers for futures...

No you can't assume you will get assigned.

:)