ameritrade is forcing me to cover a short

I guess I got myself into the situation. Its really not that big of a deal.

I wonder though if when shorting a stock the borrower shouldnt be given a time frame for the transaction.

Something like I will let you borrow these shares for no less than x days.
 
GTS sorry if I gave you the impression I wasnt fully aware of what I was doing.

You do realise I wanted to exercise the options.
 
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I still feel that ameritrade should not have offered the shares if they couldnt let me keep them.
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You can only get assigned if the options finish in the money. The alternative to what they did is to let in-the-money options go un-exercsied, in which case you would have lost the gain on your position.

My advice would be to write this off as a little "market tuition" and NEVER put yourself in such a position again. If you aren't sure you want to be assigned, close the position before it becomes an issue.
 
Thanks Rob. I feel the same way.


Guys I must not have explained clearly. Although I did not buy the options with the intent of shorting the stock, I did at some point change my mind.

So, I sold my shares of ford and held on tho the options. I intentionaly let them exercise because they were in the money a good bit.

My problem did not arrise until I was told by ameritrade that I had to cover the short.

I did not want to cover the short and I still want to be short.

But they went ahead and covered for me and in the process charged me fees for the trade.

Yes understand they didnt have the shares. I also understand they cant be naked on the sale.

I just would like ameritrade to not offer me the shares if I cannot keep them.

Its really no big deal this time. But

Imagine if you for some crazy reason shorted a stock with your entire savings.

The stock falls and you are making money.

Then your broker calls you and says oops I wasnt suposed to loan you those shares. I am going to have to ask you to cover your position.

If that happened I think you would feel the same way I do.

That if they werent suposed to loan you the shares, then they should not have offered me the shares.

I know my case is a little different because I ended up short when my options exercised, but ameritrade knew there was a chance I would exercise those options.

Anyhow case closed thank you all for the replies.
 
151, you are actually lucky that your broker gave you a courtesy call and some time to cover the short yourself. They could simply cover it themselves.
 
Quote from 151:

Imagine if you for some crazy reason shorted a stock with your entire savings.

The stock falls and you are making money.

Then your broker calls you and says oops I wasnt suposed to loan you those shares. I am going to have to ask you to cover your position.

If that happened I think you would feel the same way I do.
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In the example you just described I would be happy because I just made a ton of money.

I guess I still don't understand what you wanted Ameritrade to do differently - they could of either allowed your options to expire so you get nothing or they could exercise your options so you are short a $2.5 stock at $3/share - e.g. an instant profit of $0.5/share. Given the choice between these two options I guess I'm having a hard time seeing what is wrong with what they did.

Again - what would you have had them done differently given that they can't give you shares to short when they don't have any.
 
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I just would like ameritrade to not offer me the shares if I cannot keep them.
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Ameritrade didn't offer you any shares though. And even if they <i>did</i> let you short the stock directly (which they didn't), they'd still have the right to terminate the stock loan at will, forcing you to cover. Buying puts <b>never</b> entitles you back-door entry on a short position in hard-to-borrow stock.
 
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