Broker that Doesn't Prevent You from Buying Options (before expiration)?

O

OptionAnalyst

Hey all,

I wanted to ask you if you know a broker that would let you open option positions 10 or 5 minutes (or even 1 second before close) before expiration without having the buying power for it (by that I mean the funds needed to excercise the options).
I had a chat with an IB rep and he told me there's nothing they will do about it because it's their rule.
Example:
Let's say I wanted to buy 100 put options of BABA with a strike of $167.5 expiring today (18th August 2017). At 3:48pm I could have bought them for $0.01 a pop and at 3:57pm I could have sold them for $0.20 a pop.
Problem: IB will tell you that you need a few hundred k's in order to satisfy the post expiry margin, even if you intend on selling them before the close.
But even if you held them past close, they could just deny the excercise if you didn't have the funds. So I don't see their problem in disallowing such trading strategies.

Now I'm looking for a broker that allows it and that has a very low per contract fee for stock options.
Can anyone help out?

Kind Regards,
OptionAnalyst
 
Interesting question. If you bought them with an automatic and irrevocable NO EXERCISE , I'm not sure what the problem would be.

Maybe they don't want you competing for the cheap options.
 
OptionAnalyst said:
Hey all,

I wanted to ask you if you know a broker that would let you open option positions 10 or 5 minutes (or even 1 second before close) before expiration without having the buying power for it (by that I mean the funds needed to excercise the options).
I had a chat with an IB rep and he told me there's nothing they will do about it because it's their rule.
Example:
Let's say I wanted to buy 100 put options of BABA with a strike of $167.5 expiring today (18th August 2017). At 3:48pm I could have bought them for $0.01 a pop and at 3:57pm I could have sold them for $0.20 a pop.
Problem: IB will tell you that you need a few hundred k's in order to satisfy the post expiry margin, even if you intend on selling them before the close.
But even if you held them past close, they could just deny the excercise if you didn't have the funds. So I don't see their problem in disallowing such trading strategies.

Now I'm looking for a broker that allows it and that has a very low per contract fee for stock options.
Can anyone help out?

Kind Regards,
OptionAnalyst
More...

I'd be happy to discuss this. Send me an email, not PM, with your name and contact information and I'll give you a call Monday.

Bob
 
SoesWasBetter said:
Interesting question. If you bought them with an automatic and irrevocable NO EXERCISE , I'm not sure what the problem would be.

Maybe they don't want you competing for the cheap options.
More...
Wondering the same, they argue that it's risk management for you from their side, but I'd like to have my own risk management and not have a babysitter telling me what to do.
 
I see how this makes sense. What happens when you can't sell them due to liquidity, take the exercise because they are in the money (auto exercise) which makes you short 10,000 shares of BABA on Monday. Now news comes out over the weekend and the stock spikes up on the open Monday. Who covers that difference when you don't have the equity in the account - you or the broker?
 
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