Auto-exercise question

misterkel

misterkel

I have a bunch of ITM options that expire today and I didn't close them in time.
They will overmargin my account considerably.
Question;

Will IB auto-exercise them anyway? I can't exercise them because the system won't allow it due to the margin. I'm hoping it will auto-exercise and I can close it on Monday morning.
 
mervyn said:
yes they will, provided your margin is sufficient to take the assignment.
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That's the problem. It's not even close. I will be considerably overmargined.

I wanted to close them, but forgot the market closed early today and missed.
I think they either - sell the options internally or on some settlement board overnight OR
exercise and sell stock or
exercise and give you a few minutes on Monday morning to close it.
 
misterkel said:
I have a bunch of ITM options that expire today and I didn't close them in time.
They will overmargin my account considerably.
Question;

Will IB auto-exercise them anyway? I can't exercise them because the system won't allow it due to the margin. I'm hoping it will auto-exercise and I can close it on Monday morning.
More...

You can elect to not have them auto-exercised in TWS but you must do it before the cutoff time on the day of their expiration. Every single broker's cutoff time is different. I believe IB's is before 4:15 PM EST. I usually do it before that at 4:00 PM so they will be sure not to be exercised.
 
UPDATE:
IB did auto-exercise the options. I am deep in negative margin, but will close the positions Monday as soon as the market opens of course.

If anyone finds themselves in the situation, here is my thoughts on what they do:

If the risk is too high, IB will force the positions at market order (probably 30 minutes or so) before market closes.

If they deem the risk is acceptable for an overnight/weekend hold, they will autoexercise and force close the underlying when the market re-opens.


Their documentation says they can do either of those things OR let them expire, but I don't think they like letting them expire. Their may be a quantification for how deep ITM they are, with deeper being more likely to exercise as risk declines the deeper ITM they go.

THANK YOU to all who answered. Helpful!
 
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