CME doesn't know what an option is

[CBC]

Options by definition, are an agreement where buyers AREN'T obligated to the trade......

Quite specifically AREN'T obligated.....

AREN'T!!



Ssssssoooooooooooo

Why am I reading that Contrarian orders aren't allow on ITM options at expiry!!! ( ES EOM and both weeklies )

That means that the option buyers ARE obligated to take the underlying .


Ok, so you would just exercise or close ur option on expiry.

But what if for some reason you can't and get caught with a gap against you over the weekend??

In general you should be ok, but thats not the point, these options aren't been traded according to their definition.

 

[JackRab]

What are contrarian orders?

 

[CBC]

What are contrarian orders?

Means no bailing on your ITM options if you don't want them.... you get em.. fully obligated.

 

[JackRab]

where did you read that if I may ask? Link?

 

[CBC]

On the contract specs............. m8, u might wanna read the specs b4 you trade things.

 

[JackRab]

I always exercise anyway, otherwise why hold? But I get your point.... so there's no opt-out?

... why not just hedge the position with futures? So after you have no position... no risk...

 

[CBC]

No exactly, definition is not obligated. Turns into a future othewise.

I wonder if they are gonna make people not obligated to futures

 

[JackRab]

No exactly, definition is not obligated. Turns into a future othewise.

I wonder if they are gonna make people not obligated to futures

So what exactly is your point? You are pissed of that you don't actually have the option to NOT exercise? Who cares? Just hedge it and it's done.

They probably put that in, so it's easier for them to stick with automatic exercising...

Not having auto-exercising also has risks for the clearing banks.

When I was trading German Gov Bond options, some guy forgot to manually exercise (no auto ex. possible) his longs in time. We made about 300k on it. I reckon he lost about 25+ mln...
If his company was too small to survive, their bank would've been the one that has the loss.

In the end, auto-exercise might be better... less mistakes. And, I doubt CME or any other exchange really cares about retail traders who are upset about the fact they are not allowed to 'lose money!' on not exercising their longs.

 

[CBC]

Point is options are specifically different due to non-obigation.... these ones are tho.

Like trading a new ES future contract......that has a underlying of the original ES future.

Thanks for your thoughts.

 

[Sig]

Options by definition, are an agreement where buyers AREN'T obligated to the trade......

Quite specifically AREN'T obligated.....

AREN'T!!



Ssssssoooooooooooo

Why am I reading that Contrarian orders aren't allow on ITM options at expiry!!! ( ES EOM and both weeklies )

That means that the option buyers ARE obligated to take the underlying .


Ok, so you would just exercise or close ur option on expiry.

But what if for some reason you can't and get caught with a gap against you over the weekend??

In general you should be ok, but thats not the point, these options aren't been traded according to their definition.

You might take a look at cash settled options, they avoid the scenario you're worried about. Unfortunately limited to just a few indexes for now though.